Oral Answers to Questions

DEFENCE

The Secretary of State was asked—

Manning Levels

Tony Baldry: What assessment he has made of the references in the report of the Armed Forces Pay Review Body to the adequacy of manning levels in respect of operational commitments.

Des Browne: Mr. Speaker, with the leave of the House, let me begin by saying that I know that the whole House will join me in sending our thoughts to the 15 members of HMS Cornwall currently detained by Iran. Our thoughts go out to their friends in theatre and to their families back here in the UK. I do not intend to comment further on the issue, other than to say that we are doing everything possible to secure their release. At an appropriate time in the near future, the Foreign and Commonwealth Office will inform the House of the diplomatic efforts that are being pursued.
	We welcome the 2007 independent report by the Armed Forces Pay Review Body and acknowledge the issue that it raises about manning levels. On 1 March, I announced that the Government had accepted the report's recommendations and would implement them in full without delay. As a result, all service personnel will receive at least a 3.3 per cent. pay increase, with the 13,000 lowest paid receiving 9.2 per cent. In total, about £350 million more a year will go into pay and allowances. I also announced that we are committing £17 million to financial retention initiatives in areas where we face particular manning challenges, including the infantry and the marines—an approach endorsed by the AFPRB and the National Audit Office. We are doing all that we can to sustain manning levels for our operational commitments, and I and the chiefs of staff continue to judge that current commitments are manageable.

Tony Baldry: I thank the Secretary of State for that answer. I am sure that the thoughts and prayers of every Member will be with those illegally detained by the Iranian Government, and with their friends and families.
	The Secretary of State will know that the AFPRB's report described manning levels in the armed forces as critical and fragile. Recruitment and retention in the armed forces rely on trust, but how can people trust what the Government say about forces' funding? Last week in the Budget, the Chancellor sought to give the impression that there is an extra £400 million for forces' funding, but it turns out to be nothing of the sort: it is operational costs, which will be paid out of the Treasury reserve next year in the usual way. So how can men and women in the armed forces trust what the Government say, when even on something as fundamental as forces' funding the Chancellor of the Exchequer is playing smoke and mirrors?

Des Browne: There can be no criticism of the Treasury's support for the armed forces in the form of resources not just for pay and operational allowances—we have been able to announce the operational bonus in recent months—but for other areas. It would be much easier to conduct this debate about funding, including what comes from the reserve and what comes from the core Ministry of Defence budget, if other hon. Members—I excuse the hon. Gentleman from this—did not seek to give the impression that operational costs come from the MOD's core budget. It is well known that in every Budget and pre-Budget report, the Chancellor refers to the access to the reserve for supporting operations.

Linda Gilroy: I join the Secretary of State in his comments; our thoughts go out to the families of the 15 members of HMS Cornwall, which is of course a Plymouth-based ship.
	The 9.2 per cent. pay increase for the lowest paid personnel is welcome, and is not the real message from the pay review board that one can do a great deal about retention and recruitment by targeting money? I also thank my right hon. Friend for the money that was spent on rewarding medical service personnel.

Des Browne: I am very grateful to the AFPRB and to the National Audit Office for pointing out in their respective reports the way in which targeted incentives or financial help can assist in meeting the challenge of recruitment and retention. This year, we intended that the armed forces' settlement would help particularly the least well off—the worst paid among our troops. That was exactly what the AFPRB recommended, and I was very pleased to be able to accept that recommendation.

James Arbuthnot: Will the Secretary of State accept my congratulations on the pay settlement? Is he able to tell us what the consequences of the Budget tax changes will be, and how they will affect the lowest paid in the armed forces?

Des Browne: I accept with alacrity the right hon. Gentleman's congratulations on the armed forces pay review settlement. The Budget's impact is different for different people; for example, single-earner couples with children on a private's salary will gain from the package by more than £300 a year, and I could give more examples. He asked specifically about the lowest paid. He will know that their salary will go up to £15,677, ignoring the operational bonus. The strict effect of the Budget is that those who are single and in receipt of that amount of money will be worse off by the equivalent of about £1 per week, but one has to take into account the fact that almost all of them are likely to attract the operational bonus, so that must be factored in, too.

Willie Rennie: Harmony guidelines have been consistently broken, planning assumptions breached, readiness targets not met and essential training requirements not fulfilled. Even the Chief of the Defence Staff says that the armed forces are very stretched, so just what does it take for the Defence Secretary to admit that we are asking too much of our armed forces?

Des Browne: The hon. Gentleman sought to get the Chief of the Defence Staff to agree at the Defence Committee evidence session that we were asking too much of the armed forces, but he would not agree. It takes exactly the same for me, as for the Chief of the Defence Staff, to admit to that, which is not correct. We are not asking too much of our armed forces; we are operating at levels that are higher than the assumptions that informed our operational planning. If that is not addressed, we know what the long-term consequences will be; but the hon. Gentleman was told by the Chief of the Defence Staff during the evidence session that we are already taking steps to address those issues. As the Chief of the Defence Staff said, the screw is being somewhat loosened by the decisions that have already been made in relation to the tightened circumstances of the armed forces..

Liam Fox: The thoughts and prayers of the whole House will be with the families of those taken illegally by the Iranians in the past few days. Because we are aware of the diplomatic sensitivity, we shall not press the Government on the issue today, but we obviously want Parliament to have a chance to discuss it as soon as possible. I am sure that the House would also like to send condolences to the families of the submariners of HMS Tireless who were killed on active service—another example that shows how much they risk in our name.
	On the question of overstretch in the armed forces, the basic problem is that the Government produced the strategic defence review, defence planning assumptions came from that and a budget was designed to suit it. The Government then exceeded those defence planning assumptions in the past five years. At the same time, they are cutting the size of the Navy, the Army and the RAF, yet they are increasing expectations and activity levels. When will it dawn on them that with defence spending of only 2.2 per cent. of GDP, the lowest since 1930, they cannot conduct wars in Iraq and Afghanistan with peacetime resources, because the people who will ultimately suffer are those in our armed forces, with the inevitable consequences for recruitment and retention that we are now beginning to see.

Des Browne: I assure the hon. Gentleman that a statement will be made to the House as soon as appropriate, which will be in the near future. I join him in his condolences to the families and comrades of those who lost their lives on HMS Tireless and, indeed to the submariner who was injured in that incident.
	The hon. Gentleman and I have exchanged views a number of times at the Dispatch Box about how properly to interpret the investment that we are making in our armed forces year on year. I see now that he has moved on from the criticism he used to level at us, and now says that we are cutting the amount of money that we spend on the armed forces as a percentage of GDP. The fact is that we spend £32 billion a year on the defence budget. That, of course, as we have already discussed at Question Times, is supplemented by access to the special reserve in relation to operations. The hon. Gentleman has had plenty of time to indicate whether, if his party comes into government, he will increase that amount of money, or not increase—

Mr. Speaker: Order. That is not a matter for Question Time.

RAF Innsworth

Laurence Robertson: What consideration he is giving to the ongoing use of the RAF Innsworth site; and if he will make a statement.

Adam Ingram: There is no further Royal Air Force requirement for the Innsworth site beyond 2008. As is normal practice, we are now assessing whether there is any other military use for the site. It is too early to make any firm commitments, but one option being considered is that it should house British forces returning from Germany in the 2008-12 time frame.

Laurence Robertson: I thank the Minister for the response and the letter that I received from the Under-Secretary of State for Defence on 13 March regarding that possible transfer. Innsworth is quite a deprived area and the armed forces provide the life blood of it, so it came as a body blow to the area when the announcement was made to close the site as an RAF site. I urge the Minister to give serious consideration to moving another operation to the area, to make that decision as soon as possible, and to make the transfer, should it be to Innsworth, as soon as possible, because we do not want too long a gap between the two.

Adam Ingram: I share the concerns raised by the hon. Gentleman about the impact on local communities when such a closure takes place, but I am sure that he will appreciate that what we are seeking to do by co-locating the two main RAF headquarters on one site makes sense in defence terms, for a whole lot of good value-for-money reasons, as well as people reasons. In terms of the future use, my view is that we should be looking, as progressively as we can, to move forward the timetables. I would not like to see a major planning blight descending on that site for any length of time, if at all. It is an important site. That is why we have designated it as a potential—probable—site for other military use. If that does not happen, we should make our decisions quickly so that alternatives uses can be found.

Ballistic Missiles

Bill Wiggin: What preliminary proposals for ballistic missile defence installations in the United Kingdom have been discussed with the United States.

Des Browne: The UK makes a valuable contribution to the US ballistic missile defence system through RAF Fylingdales and our well established technical co-operation programmes. We regularly discuss with the United States our ongoing support and, as I and my right hon. Friend the Prime Minister have said on many occasions, we will inform the House of any change to the current position.

Bill Wiggin: Will the Secretary of State update the House on the position of NATO's missile defence programmes?

Des Browne: The position in relation to NATO is that there was a process of assessment as to whether the ballistic missile defence would make a contribution to NATO defence. That process reported, indicating that such a contribution could be made, following the completion of the feasibility study. NATO continues to examine the options for and the implications of territorial missile defence, but it has no plans, nor has it set a timetable for any specific decision.

David Crausby: What part will RAF Fylingdales and the US base at Menwith Hill play in any negotiations with the US on missile defence? Will there be a full and public discussion of any developments at those sites?

Des Browne: When the decision was made to incorporate RAF Fylingdales into the US missile defence system, there was a full debate in the House in relation to the role that it would play. That role— [ Interruption. ] I am not going to go into the detail of that. There was a full debate. An important contribution is made, in radar terms, to the system. No decisions have been taken in relation to any other facility or site. The discussions are ongoing and, as I told the House when I answered questions on the matter last month, it would be irresponsible of the Government not to explore, both through the United States and our NATO allies, the implications that any system of this nature might offer for the security of the UK. That is the stage that we are at. That is what we are currently doing. When there is anything further to report, we will of course report to the House.

Alistair Carmichael: I know that the Secretary of State is aware that the Polish newspaper,  Trybuna, on 7 October last year published an article that stated:
	"the United Kingdom has revised its stance and—there are many indications of this—it will make the Orkneys accessible for building the second base of universal application."
	The Secretary of State was good enough to tell me in a telephone conversation last October that that was not the case. Will he confirm that denial today and will he also confirm that neither Orkney, nor for that matter Shetland, is being considered by the United Kingdom Government in relation to an installation of this nature?

Des Browne: I know of no change in the information that I gave the hon. Gentleman when he last spoke to me in relation to this matter. As I have told the House, no sites are being considered in our very preliminary discussions in relation to the siting of any missile defence.

Bernard Jenkin: But the Government have taken a decision in principle to support missile defence as something that the Americans may wish to deploy. We know that from the memoirs of Sir Christopher Meyer, who wrote of the toothpaste summit when the Prime Minister first met President Bush in Washington, back in President Bush's first year of office. We have had a tremendous debate about nuclear weapons in this country. When are we going to have a proper debate in the House about the principle of missile defence? That issue is dividing NATO and destabilising relations with Russia.

Des Browne: The hon. Gentleman knows that the United Kingdom already makes a contribution to the US missile defence system through RAF Fylingdales and that there is other co-operation through technical programmes. All that is entirely consistent with the issue of principle. The House also knows that the Government's position—I think that most hon. Members share this view—is that it would be irresponsible not to explore with the US and its NATO allies the possible implications of the system for the security of the UK —[ Interruption. ] I can tell the hon. Gentleman that when there is something to report to the House, a report will be made. However, no decisions have been taken at this stage, and there are no developments that require the matter to be reported to, and debated in, the House.

Gerald Howarth: Given the ever-increasing prospect of rogue states, including perhaps Iran, acquiring a ballistic missile capability, does not the Secretary of State understand that it is his duty to engage in public debate, not to hide behind spurious claims that he needs to protect international relations? As far as the Fylingdales upgrade is concerned, may I remind him that there was so little debate that the Defence Committee issued a report in January 2003 that said:
	"We strongly regret ... the way in which the issue has been handled by the Government. We believe that it was a mistake on the part of the MoD to fail to respond to calls for a public debate of this issue for much of last year"?
	Why cannot the Secretary of State share with us the assessment that he has made of the risk, and of the benefits or drawbacks, that might result from the UK's participation in positioning ground-based interceptors on our soil? Alternatively, as was the case with the Fylingdales experience, are we once again to be bounced into a decision without the House or the public being engaged?

Des Browne: I know of the support of the hon. Gentleman and his party for engagement in ballistic missile defence. As he says, there are developments throughout the world that suggest that ballistic missile defence will make a significant contribution to the defence of the United Kingdom. This is a US system, and, currently, the US has not asked to examine any UK sites—for example, regarding any element of its missile defence system. I am reporting to the House the current state of our relations with the United States on this issue. I have given hon. Members an undertaking that when the situation moves beyond that, I will report to the House.

Red Arrows

Tobias Ellwood: What changes are proposed to be made to the Red Arrows' budget over the next three years.

Adam Ingram: There are no plans to change the funding for the Red Arrows.

Tobias Ellwood: I am delighted to hear that answer. However, there is concern about the future of RAF Scampton, the base at which the Red Arrows are located. There have been rumours in the press that the Government's penny-pinching on the defence budget means that the colours of smoke used in the displays are under threat. Will the Minister give a commitment that no aspect of the Red Arrows will change and that they will remain at the forefront of display teams in the UK?

Adam Ingram: Well, I have not heard about the colours of smoke, but I will certainly look into that—

Julian Lewis: Smoke and mirrors!

Adam Ingram: I hear what the hon. Gentleman says, but I will certainly examine the matter because we take great pride in what the Red Arrows do, not only in this country, but internationally.

Tobias Ellwood: What about RAF Scampton?

Adam Ingram: I will come to RAF Scampton in a moment. I am trying to pay tribute to the Red Arrows, which I thought that the hon. Gentleman would want me to do. The Red Arrows make a major contribution in many ways. They fly the flag for this country and help recruitment to the RAF.
	RAF Scampton, like several RAF airfields, is under review because we need to find the optimal basing for all our RAF assets. We have already taken some decisions on the Nimrod MRA4 and on future basing for the joint combat aircraft and Typhoon. We will continue to examine what the best lay-down will be and announcements will be made in due course.

Lindsay Hoyle: I thank my right hon. Friend for his straightforward answer. However, may I press him a little further and suggest that he should increase the budget of the Red Arrows? As we know, all young people, such as Chorley air cadets, aspire to join the RAF and especially want to join the Red Arrows. Will he ensure that we will have the fine aircraft and the fine personnel that keep them flying, and that there is a bonus for BAE workers in Lancashire, which is why I am pressing him to increase the funding?

Adam Ingram: I can tell my hon. Friend that in the next three financial years the funding will be £5.6 million, £5.7 million and £5.9 million. He can take some credit for putting pressure on us to ensure that increase in the budget. Of course, there are other associated costs, too. The Red Arrows are not under threat; it does not matter what newspapers say or what criticisms people concoct. They are not under threat—end of story.

Patrick Mercer: The citizens of Nottinghamshire and Lincolnshire take huge pride in what the Red Arrows do, and I am glad to hear from the Minister that their budget will not be cut. However, we should not consider them to be purely a flag-flying operation, as they clearly provide crucial battle flying skills for the RAF. Will the Minister please assure me that crew will continue to be trained regularly, and that the expense will be borne, so that the skills that they acquire can be spread throughout the Royal Air Force?

Adam Ingram: I do not think that we can keep the Red Arrows flying without meeting that commitment, because it takes the highest skill to fly those aircraft, no matter what colour the smoke coming out of the back. I am sure that the fact that we are retaining the Red Arrows means that the element of the requirement that the hon. Gentleman mentions will be retained.

David Taylor: As an east midlands MP I am pleased that the Red Arrows are based at RAF Scampton in Lincolnshire. I am sure that the Minister will agree that the Red Arrows are a public display of the pride, talent and professionalism of our armed forces. Will he confirm that the figures that he has just announced to the House, which represent barely half a day's worth of the annual defence budget of £32 billion, will be protected in the medium and long term?

Adam Ingram: The original question was about the commitment over the next three years, and I have given that firm commitment. It would be very easy for me to say, after all the plaudits that I have given, that I do not see any chance of the situation altering, and I do not, but I cannot make commitments for what my hon. Friend calls the medium and long term, and that would apply to any part of defence expenditure. I have given a firm commitment: there is no threat to the Red Arrows and the budget is increasing over the next three years.

Bullying (Armed Forces)

Lorely Burt: What steps he is taking to combat harassment, discrimination and bullying in the armed forces relating to gender, race and ethnicity; and if he will make a statement.

Derek Twigg: In 2006 the Ministry of Defence published an overarching equality and diversity scheme that sets out our approach to equality and diversity. Measures that we intend to undertake are set out in our annual action plan, published in conjunction with the scheme. The armed forces have entered into formal agreements with the Commission for Racial Equality to promote racial equality and take action to prevent racial harassment and discrimination, and with the Equal Opportunities Commission to prevent and deal with sexual harassment.

Lorely Burt: In the light of recent comments that again highlighted the continuing existence of racism in the armed forces, will the Secretary of State guarantee that he will address any forms of latent or overt racism in the armed forces by developing measures to tackle the problem head-on—for example by developing an independent military complaints body to give voice to those who have experienced any form of discrimination and bullying?

Derek Twigg: On the point about an independent military complaints authority, we set up an independent complaints system as part of a Bill that recently went through Parliament. There is no place at all for discrimination or harassment in the armed forces, and I can tell the hon. Lady that from the very highest levels downward, there is clear commitment to making sure that they do not take place and to dealing with them when they do. For instance, we ensure that progress reports are made to the Equal Opportunities Commission, and we have a new complaints procedure in place. Of course, training and education are key, and above all else, it is leadership that delivers that. That is why I am confident that the armed forces are clearly moving forward on the issue. Any discrimination or harassment is just not acceptable.

Sarah McCarthy-Fry: Last Thursday and Friday, I visited Her Majesty's naval base Clyde at Faslane, and I was impressed by the quality of the new single living accommodation for new recruits to the Navy. There was slight concern that because the new accommodation is en suite, there is a danger that the young ratings will just go to their rooms of an evening, so bullying and harassment may go undetected. Does my hon. Friend agree that commanding officers will have to take on board and recognise that? Although the new accommodation is much better for the ratings, commanding officers have to recognise that such a problem could occur.

Derek Twigg: Like my hon. Friend, I have visited a number of single living accommodation units in recent months, and I was very impressed by their quality and standard. I have also talked through the issue with commanding officers. For instance, I have discussed with regimental sergeant majors how we can ensure that protection, advice and training are given to look after our young recruits. She may have noticed that the adult learning inspectorate recently concluded that substantial improvements had been made everywhere, and that there were some marked achievements. It described our achievements as
	"something of a triumph of focused effort to resolve serious problems."
	A tremendous amount of effort and time have gone into ensuring that we deal with bullying and look after our new recruits. The living accommodation in the new facilities that we have put in place is one way of doing so.

Michael Penning: This evening, "Panorama" will show a programme about a huge increase in soldiers going absent without leave from active service. If that is the case, does it have something to do with bullying, or are our servicemen being stretched too far and not receiving the medical back-up that they need?

Derek Twigg: I totally rebut any such allegations. In fact, there has been a decrease in the past few years in the number of people going absent without leave. The latest figures are lower than they were seven years ago, and there is strong support for people who have developed mental health problems in the armed forces, on the bases and elsewhere. Some of the evidence shows that a key reason for members of the armed forces going absent without leave is relationship issues. In my surgery on Saturday, I met someone who had been in that position and wants to rejoin the Army—that was exactly the position in which they found themselves. That is how many of the issues arise. The support is there, and there is a welfare line that people can contact, so I reject and rebut the allegations completely.

Kevan Jones: The hon. Member for Solihull (Lorely Burt) is clearly not aware of the excellent provision for a service complaints commissioner in the Armed Forces Act 2006. Will my hon. Friend the Minister tell me when that office will be set up? I have tabled written questions on the issue, but because of the snail's pace at which the Department answers questions, I have yet to receive a reply.

Derek Twigg: I, too, support the development of that process, and may I assure my hon. Friend that progress is being made, and we will certainly be in a position to make a further announcement?

Nicholas Soames: Does the hon. Gentleman acknowledge that while of course there is no place for bullying and discrimination, it is nevertheless a fact that those young men and women, who are covering themselves in immense distinction under circumstances of great difficulty in Iraq and Afghanistan, can do so because they go through a very tough and robust training programme, which is designed to prepare them for what they are likely to meet if they have to go on active service? Will he therefore be very careful, and not be seduced in any way by the siren voice of the hon. Member for Solihull (Lorely Burt), whose talk is of a kind unknown to the armed forces, which want to get on with it and do the job that they know they need to do, and be trained to do it.

Derek Twigg: The hon. Gentleman makes a very important point. Clearly, we have to have robust and challenging training, because of the nature of operations and service that our armed forces have to undertake. Again, I have visited a number of training establishments in the six months I have been in this job. I have been impressed both by the robustness and the challenges of the training for recruits, and by welfare support and support generally, given the issues that recruits may encounter. I completely accept the point made by the hon. Gentleman—we need robust and challenging training, but we must put procedures in place to make sure any complaints can be dealt with and that people are comfortable, if they suffer any difficulties, with the system for making a complaint.

South Africa

Mary Creagh: What support his Department has allocated to peace support training in South Africa in 2007-08.

Adam Ingram: Building peace support capacity will remain a high priority for the MOD in support of the UK's overall approach to conflict prevention across sub-Saharan Africa during 2007 and 2008. In South Africa, the nine-man British peace support team, which is 50 per cent. funded by the South Africa national defence force, will continue to provide training and advisory support in the areas of military education, peacekeeping, doctrine development, training and sustainment. In addition, the team co-ordinates UK-funded attendance of South African personnel on related courses in the UK and across Africa. We have allocated £1.3 million to support this effort in 2007-08.

Mary Creagh: I congratulate the armed forces on the vital work that they are doing in that area. Does my right hon. Friend agree that military capacity must be aligned to political will in South Africa? As Zimbabwe spirals ever closer to anarchy, does he agree that South Africa must provide regional leadership for intervention and conflict prevention in that country?

Adam Ingram: My hon. Friend asks about a very important aspect. With international allies, we have been trying to get regional groupings together, with the support of the African nations. In the west of Africa there is a well functioning organisation in place, ECOWAS—the Economic Community of West African States. SADC—the Southern African Development Community—in the south is somewhat limited because of Zimbabwe's presence within it. There is a similar initiative in the east of Africa. My hon. Friend is right. It is about building not just the military capacity of the African nations, but their capacity to govern outwith their own area. As ever, there is the strapline of African solutions to African problems. We will continue to help wherever we can to meet those problems as they arise, as part of international coalitions in friendship with those African nations.

Veterans Day

James McGovern: What support his Department is providing for this year's veterans day celebrations.

Derek Twigg: The Department has increased the support available to regional veterans day events for 2007. Organisers can bid for up to £10,000 for their individual regional events. Officials have also provided advice to all 65 bids so far received on conveying effectively the key messages and on the presentation of veterans badges by leading members of the community as a central feature of the day.

James McGovern: I thank the Government for their establishment of and continued support for veterans day. The Minister is aware that last year the main celebration in Scotland took place in Dundee in my constituency and was a resounding success, thanks mainly to Government funding and the hard work of the local combined ex-service association ably led by Bruce Kelly and Victor Herd. This year, however, there seems to be a problem with funding. Will the Minister agree to meet me so that we can ensure that the success of Dundee's day last year will be repeated this year?

Derek Twigg: I will be happy to meet my hon. Friend. As he probably knows, we have increased the amount of funding available this year. Whereas last year we centred it on major cities, this year we are trying to involve many more towns and cities and therefore spreading the funding around. We have had an enormous number of bids. I am pleased to say that Birmingham has been agreed for a national event and of course there will be events in Greenwich in London as well. This is a great opportunity for us to celebrate and get across the importance of veterans, their contribution to our society and the services that are available for them.

Robert Key: Will the Minister bear it in mind that veterans are increasingly young and that on the whole, when we celebrate Armistice day, we are celebrating an historic event, but when we celebrate veterans day, we are celebrating contemporary people who have served recently in the forces? We need to shift the focus of public understanding to the contribution made by the current generation to the armed services, which is in danger of being lost.

Derek Twigg: I entirely accept what the hon. Gentleman says. Veterans are of all ages. One whom I met a few weeks ago was 22, and a Normandy veteran was 86 or 87. At a veterans event that I attended recently in my constituency, I was struck by the ages of veterans. I met a number of young veterans and discussed the issues affecting them. It is right to get across the diversity of age and the important role that veterans of all ages and backgrounds have played in protecting the peace and representing this country as a force for good.

Ian Davidson: Is the Minister aware that the Secretary of State for Defence himself recently came to present badges to veterans in my constituency? The event was a great success, even though we did not get the amount of money that Dundee did. We managed to raise the money ourselves. Will the Secretary of State visit my constituency again, and will he recognise that veterans in my constituency are very proud of the fact that they served with others from other parts of the United Kingdom, and that an artificial division between those who served from Scotland and those who served from other parts of the United Kingdom, as some would wish, would be absurd and obscene?

Derek Twigg: I agree with my hon. Friend that that would be absurd.
	The veterans badge has been a widespread success. More than 400,000 badges have been issued, and there are more applications to come in. We are gradually increasing the time frame for applications. I recently announced that 1984 will be the next stage when people can apply for veterans badges, which will take the Falklands campaign into account. Feedback from veterans indicates that they value the badge, and I would be more than happy to come to my hon. Friend's constituency to present some badges.

Patrick Cormack: I wish the Minister well with this year's veterans day. If we are to have the maximum public participation and recognition, should not we all be able to take part and should it not be a public holiday?

Derek Twigg: I will not go down the road of a public holiday at this point. It is important that we all take part. A number of hon. Members have said that they are involved in events that will take place in the week of veterans day. It is crucial that Members of Parliament give their support—many have already done so—which is increasing all the time. Any support or encouragement that Members of Parliament can give to their local events will be most welcome.

Paul Flynn: The best way to support the splendid innovation of veterans day is to back the campaign by the loved ones of 98 of the soldiers who have fallen in Iraq to have the work "Queen and Country" by the official war artist, Steve McQueen, which includes photographs of those 98 fallen soldiers, produced in the form of a postage stamp by the Post Office as an act of commemoration.

Derek Twigg: I repeat my earlier comments about the importance of veterans day and of the various events and initiatives to raise the profile of veterans. I am happy to speak to my hon. Friend to discuss that issue, of which I have no knowledge at this time.

Nicholas Winterton: I commend the Ministry of Defence on its work on veterans day. The Minister mentioned the Falkland Islands in an earlier answer to a supplementary question: is he placing any emphasis on the fact that this year is the 25th anniversary of the defeat of the Argentineans and their expulsion from the Falkland Islands? Is he allocating any particular resources to recognising the contributions that our veterans of the Army, Navy and Air Force played in that epic event in our history?

Derek Twigg: The hon. Gentleman has been supportive in maintaining the profile of the Falklands campaign. We pay tribute to all the veterans who took part in that campaign, some of whom are still serving today. Last week, I met some of them in Portsmouth—they did a tremendous thing for this country. We are focusing on the Falklands this year, and commemorations and funding have been agreed. I am going out to the Falklands later this year with the veterans to visit the area and meet people. That is an important part of the focus of this year's veterans day, and I am sure that the hon. Gentleman will play his part.

Armed Forces Pay

David Wright: What changes there were in rates of pay for the UK armed forces in each of the last 10 years; and if he will make a statement.

Des Browne: As my hon. Friend will be aware, pay rates for the armed forces are recommended annually by the independent Armed Forces Pay Review Body. Since 1998, the average increase has been 3.3 per cent.

David Wright: A number of units within our armed forces seem to be regularly rotated into front-line action, and rightly so—one thinks of the Royal Marines and the Parachute Regiment. In an earlier answer, my right hon. Friend said that he will focus on better pay and conditions in those particular units to ensure that recruitment stays high. I welcome his commitment to support a 9.2 per cent. increase for the lowest paid members of our armed forces, but what more can we do to ensure that those elements of our forces that regularly rotate on to the front line are rewarded properly?

Des Browne: My hon. Friend will know that there is a tax-free operational allowance, which is £2,240 for six months—in my view, and, I think, in the view of the armed forces, it goes some way to recognising the contribution made on operations. As well as those who get a 9.2 per cent. pay rise, the next band up gets a 6.2 per cent. pay rise as a result of the acceptance of the recommendations of the Armed Forces Pay Review Body. The Armed Forces Pay Review Body report reflects the fact that there are a number of specific incentives, one of which concerns the retention of marines, to address pinch points that result in retention problems in the armed forces. In the past, such approaches have improved our ability to hold on to those who have the skills that we need, whether or not they were deployed in operational theatres, and that is what we will continue to do.

Mark Harper: I am sure that the Secretary of State will take a close personal interest in the fact that next month the Army will have its first pay run under the new joint personnel administration—JPA. He will remember that when the system was rolled out in the RAF and the Navy there were errors in the pay of 6,500 members of the RAF and 10,000 Navy personnel. Will he assure the House that he has taken steps to ensure that such errors will not be repeated in the Army's pay run next month?

Des Browne: I was aware of the teething problems with the roll-out of JPA to the RAF and Royal Navy. The hon. Gentleman will know that when the system was rolled out to the Royal Navy in October 2006 we were able, as a result of the RAF experience, to anticipate some problems and to respond to others timeously for those affected. I am advised that the programme is on track to go live in the Army from March 2007. He may rest assured that it has put in place a number of contingency plans to deal with any possibilities that may arise.

Jim Devine: As my right hon. Friend is aware, more than 20,000 people who are employed by the Ministry of Defence live in Scotland; given an average salary of £20,000, that means that nearly £500 million is being pump-primed into the Scottish economy. Is my figure correct? Would he like to speculate on the security of that investment in Scotland in the short, medium and long-term?

Des Browne: As far as I can see, the Scottish people intend to stay part of the United Kingdom, so my hon. Friend may be reassured that the contribution that is being made and the economic consequences of that contribution to the Scottish economy will continue. Of course, the people of Scotland must take into account—this is why they are so intent on staying in the United Kingdom—the fact that taking Scotland out of the United Kingdom, particularly if it were ruled by those who propose to do so, would mean coming out of NATO. In such circumstances, there would be no need for those who currently serve the British armed forces to serve the armed forces of an independent Scotland.

UK/EU Navies

Andrew Robathan: What recent assessment he has made of the performance and requirements of the navies of (a) the United Kingdom and (b) other EU member states.

Adam Ingram: We regularly assess the performance and requirements of the Royal Navy through routine departmental planning processes. The performance and requirements of navies belonging to EU member states are matters for the countries concerned.

Andrew Robathan: At this time, we should remember with pride the role of the Royal Navy in suppressing the transatlantic slave trade in the 19th century, as well as 400-odd years of excellent service to this country. Instead, under this Government, the Navy has been cut, cut and cut again, to the extent that the First Sea Lord has said that this country's naval capability risks being turned into that of Belgium. He has called in particular for two carriers, which the Government have promised. The main gate decision should have been taken in April 2004; three years later, we must ask when, if ever, the order for the carriers will be placed.

Adam Ingram: The hon. Gentleman began by discussing the slave trade, and I echo his sentiments on that. We are talking about not only the passing of an Act of Parliament in terms of the abolition of slavery, but the bravery of the Royal Navy—in the main—on the high seas; it tried to stop that ongoing trade after the passing of the relevant Act in this House all those years ago, and many lives were lost in its doing so. The bravery of the Royal Navy should be marked, alongside all the other events that are taking place in respect of the abolition of the slave trade.
	The hon. Gentleman asked a range of questions, but his main question was about the carriers. We are still committed to carriers, and an announcement will be made when we are ready to make it.

Keith Vaz: The Minister will know that there were two birthday celebrations last week: the European Union was 50 years old and, last Thursday, our right hon. Friend the Defence Secretary was 55. At the celebrations in Berlin, there was a discussion about further co-operation between our EU partners. Following on from St. Malo in 1998 and Le Touquet in 2003, is the Minister satisfied that, as regards the Navy, we have the capabilities required to work more closely with our colleagues so that we can have a more collective approach to our armed services?

Adam Ingram: I recognise one of the birthdays. Let me deal with the EU aspect. In building up our capabilities with NATO and EU, not only as regards the Royal Navy but across our armed forces, we are meeting the various challenges that have been set, including the headline goals that were laid down for 2010. That is part of the process of ensuring that we have the capabilities required not only to meet the foreseeable demands as best we can anticipate but to be ready for, and able to address, the unforeseen. There are many examples of joint training taking place to build up that interoperability between nations. It is important that we work with our allies in the EU and in NATO and that we stop those who are advocating part of this proud nation coming out of NATO, which would diminish our capacity to defend these shores and work against good European tradition.

Ann Winterton: Is not one of the requirements of the United Kingdom Navy to obey the rules of engagement set by the Ministry of Defence? Did not the current rules of engagement that allow no conflict in Iraqi waters with Iranian forces lead directly to 15 of our service personnel being abducted by the Iranians?

Adam Ingram: Rather than speculate about events, let us stand back and understand the sensitivity of the situation. There is too much speculation about what happened and what did not happen. Those carrying out that mission clearly have to respond to the level of threat that is posed to them. We will have to investigate that when they are safely returned to these shores and we get their version of events rather than the speculation that is being paraded around in the media and elsewhere.

Chris Bryant: Clearly, the most important requirement for the Royal Navy is personnel. One of its great sources of new recruits is the sea cadet units around the country, including HMS Minerva in Llwynypia in Rhondda. However, those units get no direct guaranteed funding from the Ministry of Defence. Is it not time that we put them on a proper footing?

Adam Ingram: If my hon. Friend looks into this, he will find that that is because of the way in which the sea cadets have been set up as a charitable organisation. I do not have all the information to hand as to the precise structure, but I will ensure that the Under-Secretary, my hon. Friend the Member for Halton (Derek Twigg), who has responsibility for this, responds to him in detail.

Julian Lewis: Most of the 29 ships that have joined the fleet since this Government came to office were ordered under the previous, Conservative Government. Is it not a fact that in the past five years the only warship order has been for a single, solitary offshore patrol vessel? When the order for the carriers eventually, and belatedly, comes through, will the Minister guarantee that it will not be used as cover for the cancellation of the seventh and eighth Type 45 destroyers, which the Navy says it needs to ensure that the carrier taskforces are properly protected?

Adam Ingram: As has been said many times from the Dispatch Box by previous Administrations as well as this one, there is a continuum in the defence of this country. It does not surprise me that ships that have been commissioned in the past 10 years were ordered in previous periods. The important aspect is that those orders were carried out because it was acknowledged that it is important to maintain the strength of the Royal Navy. On top of that, there is a projected £14 billion capital programme for the Royal Navy in the next decade. That includes carriers, Type 45s and other vessels for the Royal Navy. At the end of that, it will be a formidable Navy.
	The Royal Navy is at the point of change—change for the better.

Injured Troops

Alison Seabeck: What progress has been made in improving health care provided to troops injured on operations on their return to the UK.

Derek Twigg: Selly Oak hospital, part of the University Hospital Birmingham NHS Foundation Trust, is the primary reception hospital for operational casualties. It is a centre of excellence for treating the injuries sustained by our troops. A military-managed ward reached initial operating capability in December 2006. There are 22 military nurses, including military nursing managers, who work at all levels on the ward. That allows the presence of military nursing staff on duty on every shift. We have also increased the overall number of military psychiatric support nurses and have military welfare staff and liaison officers at the hospital.
	Personnel who require rehabilitation following hospital treatment may receive it at the Defence Medical Rehabilitation Centre at Headley Court. That world-class facility provides high-quality, appropriate prosthetics and adaptations, manufactured on site and individually tailored as necessary to the specific patient.

Alison Seabeck: My hon. Friend knows that a large contingent of personnel from Plymouth is currently serving in Iraq and Afghanistan. I cannot emphasise enough the importance to the families of understanding that there is a decent health care service in place for those who are injured, and equally for those who return from stressful tours of duty. Will my hon. Friend assure me that, despite the recent incident in Cyprus, the Ministry will continue to support decompression programmes—one of which I saw on HMS Temeraire—to assist, for example, Iraq veterans back into regular Army service?

Derek Twigg: It is clear that we provide top quality, world-class medical support and treatment for our injured service personnel. I have talked to many injured service personnel and their families in recent months. A recent survey at Selly Oak of those who had been discharged showed everybody saying that their care and treatment had been excellent, very good or good. It is clearly an important facility, which we are continuing to develop. We are taking an initiative on reservists and mental health. Mental health support exists pre and post-deployment.
	Decompression is important, and commanding officers decide how it is handled and delivered. It clearly has an important role to play in allowing service personnel who return from operations in Afghanistan and Iraq to come to terms with their experiences, discuss any difficult problems that they may need to take forward and, of course, relax. That is all part of the process before returning home to their loved ones.

Nick Harvey: Given the success of Defence Medical Services in keeping alive injured troops who, in earlier times, would have died, is the Under-Secretary satisfied with the aftercare available, especially for those injured out of the services? Is he content with the long waiting list for former servicemen to access psychiatric services? Given increasing awareness of the services available and the problems that former servicemen experience, will he expand the defence psychiatric service to make it the equal of those in America, Australia and the Netherlands?

Derek Twigg: As the hon. Gentleman knows, Defence Medical Services is responsible for such services, pre and post-deployment. As he rightly said, once personnel leave the armed forces, they become the responsibility of the NHS. In October, we announced the reservist mental health care plan, whereby reservists who visit their GPs are referred to the defence medical mental health unit at Chilwell. We are currently working with the Department of Health and Combat Stress to improve further the mental health support for our veterans.
	We hope to get several pilot schemes up and running in the not-too-distant future to consider how we improve both the understanding of mental health problems that result from being on operations or in the armed forces and education and support for that throughout the health service. I shall report further to the House as that develops.

Gwyneth Dunwoody: Will my hon. Friend note that it is very important that servicemen be treated within units where they are totally comfortable and surrounded by those who they most want to be with? Will he resist any attempt to divide the specialist units from the main national health service providers because it is essential that they be given a wide range of treatments and are not left in conditions that are inadequate in comparison with other NHS patients?

Derek Twigg: My hon. Friend makes a very important point, but the decision to move away from military hospitals was taken some time ago and it was based on expert clinical and medical advice. It is important to ensure that practitioners, clinicians and military medical staff are able to develop their experience, see a range of cases and be given a range of skills to use out on the front line in Afghanistan and Iraq and back home when injured soldiers return. The best way for that to happen is in the context of a large NHS trust where those skills can be developed and honed. The experience they gain there can be used for the benefit of injured armed forces personnel.

Liam Fox: General Sir Richard Dannatt said that we may see a dedicated military ward at Selly Oak within three years, but at Prime Minister's Questions, the Prime Minister did not seem to believe in the concept at all and we now know from contractors at Selly Oak that it will be at least five years before such a unit is up and running. What is the truth in all that shambles? People in this country think that our troops deserve better than the confusion and contradiction that they are getting and want to see an exclusive military unit inside the NHS as soon as possible.

Derek Twigg: We are now seeing the best medical treatment ever for our armed forces personnel, thanks to the quality and expertise at places like Selly Oak as well as in the field hospitals in operations out in Iraq and Afghanistan. Let me make it clear that we are moving towards a military managed ward with initial operating capability and by the early summer we will have full capability. Alterations and works are taking place at Selly Oak hospital to do that. As to General Dannatt's comments, he raised the issue of having a fully military ward—in other words, a ward with no civilian patients—but it is a problem when there are empty beds and civilian patients need them. It is important to think about how to deal with that problem. With the developments coming up over the next few years, including the development of new units at the hospital at Selly Oak, we will be looking further into how to introduce a military ward into the new facility. We are working with people at Selly Oak and elsewhere to do that, as General Dannatt understands.

Business of the House

Jack Straw: With permission, Mr. Speaker, I should like to make a statement altering the business of the House for tomorrow in the interests of restoring devolved government in Northern Ireland:
	Tuesday 27 March—Consideration of a business of the House motion. Followed by proceedings on the Northern Ireland (St. Andrews Agreement) (No.2) Bill followed by conclusion of the Budget Statement. Followed by, if necessary, consideration of Lords Amendments to the Northern Ireland (St. Andrews Agreement) (No.2) Bill.
	The House will not adjourn until Royal Assent has been signified.
	The business for Wednesday and Thursday remains unchanged and as previously announced.
	Wednesday 28 March—Motions relating to communications allowance, notices of questions during September, Select Committees (Reports) and parliamentary contributory pension fund. Followed by motion to approve a statutory instrument on casinos.
	Thursday 29 March—Motion on the Easter recess Adjournment.
	The House will recall that the St. Andrews agreement set out a timetable for devolution; and the Northern Ireland (St. Andrews Agreement) Act 2006 set in statute the date for the restoration of devolution as 26 March—in other words, today. My right hon. Friends the Prime Minister and the Secretary of State for Northern Ireland have repeatedly made it clear that, nine years after the Good Friday agreement and following countless rounds of talks and negotiations, the point has been reached where substance has to take over from process. Both my right hon. Friends have stated in categorical terms—and I have underlined in the House—that if the path to devolution today as laid out by the British and Irish Governments were not followed, the parties would have to reach agreement on a way forward themselves.
	Our way, which in November Parliament endorsed without dissent in the 2006 Act, has been clear: that if devolution did not happen today, dissolution would happen tomorrow. That is why I made it clear, both last Thursday and the Thursday before, that the Government planned no emergency legislation as the Democratic Unionist party had requested—a position reaffirmed to its leadership team in a meeting last Wednesday by the Prime Minister.
	In the long and difficult history of Northern Ireland, our approach to date has been based on a reality—that up to now there has never been a consensus or a way forward agreed between the parties. All the achievements since the 1998 Good Friday agreement, however momentous, have depended on the two Governments calling it as they thought best. Until today, that approach has been the only one available because the parties themselves have been unwilling to do so their own way.
	However, my right hon. Friend the Secretary of State for Northern Ireland was informed earlier today that an agreed way forward to devolution has now been found. The leaders of the Democratic Unionist party and Sinn Fein—the right hon. Member for North Antrim (Rev. Ian Paisley) and the Member for Belfast, West (Mr. Adams)—met for very the first time this morning at Stormont, and have agreed to participate in a power-sharing agreement on 8 May. Right hon. and hon. Members will recognise the extraordinary significance of that. Many in the House and beyond would never have expected such a development in their lifetimes. The fact that it has been achieved is a tribute not only to the work of my right hon. Friends the Prime Minister and the Secretary of State but to their predecessors in both Labour and Conservative Administrations who, throughout the past 35 years, worked tirelessly to bring about a settlement that would allow devolution to be restored and to end direct rule in Northern Ireland. Most importantly, it is a tribute to the commitment of all the political parties in Northern Ireland.
	This morning, following their meeting, the leaders of the DUP and Sinn Fein together asked Her Majesty's Government to introduce emergency legislation immediately to give effect to their agreement. To achieve that within the framework put in place last November by Parliament in the Northern Ireland (St. Andrews Agreement) Act 2006, it is essential that the necessary changes to that Act be made by midnight tomorrow. I am therefore proposing to the House a change to the Order Paper tomorrow to allow a very short technical Bill to be considered to put the necessary changes in place. My noble Friend the Chief Whip in the Lords will make a similar request in the other place.
	I appreciate that this is an exceptional situation—but these are exceptional circumstances. If the representatives of Unionism, republicanism and nationalism can reach agreement on what the whole House will hope will be a final political settlement in Northern Ireland through a shared future, it is right that this House should do all that it can to facilitate that in the interests of the people of Northern Ireland. A Bill will therefore be put before the House tomorrow with the aim of Royal Assent before midnight. As my right hon. Friend the Secretary of State for Northern Ireland will cover all the key points during consideration of the Bill, I am sure that the whole House will understand that tomorrow's oral statement, of which I gave notice last Thursday, will now not take place.

Theresa May: As the Leader of the House has said, this is a significant day for Northern Ireland, and we welcome the fact that agreement has been achieved, and that devolution will now be restored in Northern Ireland. As the Leader of the House has done, I pay tribute to all those, across Governments and parties, who have worked to that end. We, too, want the legislation passed through Parliament, and we will co-operate to ensure that it gets through in the required time.
	Important though the new emergency legislation is for Northern Ireland, the Leader of the House's statement has implications for the rest of our business this week. The introduction of a new Bill tomorrow will have particular implications for our debate on the Budget. What is proposed will cut short that debate, especially were the Government to meet the expectation of many right hon. and hon. Members for a statement on the capture of armed forces by Iran.
	Why does the Leader of the House intend to cut debate on the Budget short? Surely we should ensure that the time for that debate is protected, and he has options to do that. He could, of course, extend the time for debate tomorrow. Preferably, Parliament's sitting this week could be extended: we could sit on Friday, or on Monday of next week. Agreement in Northern Ireland, and agreement on a restoration of devolution in Northern Ireland, is a significant step, but should not be an excuse for the Government to ride roughshod over Parliament and shorten debate on the Budget. We welcome the agreement, and we will co-operate in getting the legislation through, but I urge the Leader of the House to look again at the order of business for this week.

Jack Straw: I thank the right hon. Lady for her welcome, on behalf of the Opposition, for the principle of what we propose tomorrow. As I said in my opening statement, we pay tribute to the Conservative Administrations and Opposition for the constructive part that they have played in achieving what is a historic moment. I reassure the right hon. Lady and the Opposition, who I know are anxious to debate every last detail of the Budget, as, indeed, are we, that we are ready to extend tomorrow's parliamentary day by a significant amount. The timing can be agreed between the usual channels in the usual constructive way. I hope that that helps the House. We will also consider whether to make a statement on Iran.

David Heath: I, too, thank the Leader of the House for his brief statement. What has been achieved in Northern Ireland appears to be both extraordinary and welcome news, and we very much hope that it comes to fruition. It is right to put on record our appreciation to all concerned, in all parties, who have worked so hard to achieve a result.
	The Liberal Democrats have been sceptical about deadlines. We were sceptical last time, and we would be even more sceptical were another deadline to be reached and passed without resolution. I believe that the country would expect us to put aside any consideration of the order of business in order to accommodate what might be an historic settlement, but I agree with the right hon. Member for Maidenhead (Mrs. May) that that must not, and need not, be at the expense of giving proper consideration to the Budget. Do I understand from what the Leader of the House said that he will fully protect the time set aside for the Budget debate tomorrow? If not, will he consider having a later sitting on Wednesday so that we can conclude the Budget debate and the Divisions on the Budget resolutions without losing any of the time that has been set aside for the other matters that are due to be debated on that day? It would be extremely helpful if he were to make that clear.

Jack Straw: I thank the hon. Gentleman for his welcome. As for scepticism about deadlines, I think that the whole House will agree that were it not for the very clear deadline that was set in the St. Andrews agreement Act, it is unlikely that these very constructive events would have taken place. I have already said that we are willing to extend the parliamentary day tomorrow, but I cannot agree that there will be exact, minute-for-minute injury time. We are working on that, but it is a matter for the Whips of the different parties to agree. We recognise that the time for tomorrow's debate on the Budget might need to be extended. As for statements, hon. Members know that statements and urgent questions are bound to eat into the normal public business. That is a straightforward reality.

Patrick Cormack: As it is important that there should be adequate debate on the important Northern Ireland measure, which we all welcome, why does not the Leader of the House follow the precedent that we used at Christmas, when we resumed the Queen's Speech debate after it was interrupted for Northern Ireland legislation? Why not resume the Budget debate on Wednesday and devote tomorrow to this historic event?

Jack Straw: We have to get the whole thing through tomorrow, which means that we have to debate it early so that the other place can then debate it. It is a very short Bill—[Hon. Members: "Start early."] I am in favour of starting early and finishing late, but others in this place have taken different decisions on that. However, that is another debate.
	We have to debate the Bill first in the order of business, after any statements or urgent questions, and it must then go to the other place. Any amendments have to come back to us, and there may be some ping-pong between the Houses, although we hope not. In that situation, it makes sense to continue debating the Budget. This does not really compare with what happened in November, because that Bill was much longer and more complicated.

Andrew MacKay: Clearly, these are exciting times. The Leader of the House is absolutely right to bring in the emergency legislation tomorrow—I am sure that it will have the full support of the whole House. However, I commend my hon. Friend the Member for South Staffordshire (Sir Patrick Cormack) for his comments that the Budget debate should be concluded on Wednesday. I say gently to the Leader of the House that there is not very important business on Wednesday; indeed, we might be doing a great favour to the Patronage Secretary by withdrawing the debate on the casino order, which she might well lose.

Jack Straw: The right hon. Gentleman anticipates my answer: quite important—very important—Government business is tabled for Wednesday, and I think it would be convenient for the whole House if it were dealt with on that day.

Bob Spink: Will the Leader of the House acknowledge the personal contribution of John Major, who is generally recognised to have started the process that should lead to sustainable peace in Northern Ireland? Will he also reconsider the business tabled for later this week? As one of the usual suspects when it comes to the Easter Adjournment debate, I can assure him that we should be very happy to sacrifice some or all of that debate to accommodate other business this week, so that the Budget debate is not curtailed.

Jack Straw: It is nice that the hon. Gentleman should think that the amount of time available for debate on constituency and wider issues on the motion for the Easter Adjournment is in his gift. In any event, I shall bear in mind what he said.
	Of course I pay tribute to John Major. I did so in general, but I am happy to do so in particular as well. His was a very significant contribution to what has happened today.

Julian Brazier: The Leader of the House's historic announcement of the legislation for tomorrow is obviously welcome on both sides of the House, as is his agreement to make a concession on the time for debate on the Budget, but may I return him to the question from my right hon. Friend the Shadow Leader of the House and ask for an assurance that none of this will compromise time for a statement on what has happened to the 15 service men who have been seized by the Iranians? Many of us will want to ask questions about, for instance, the rules of engagement that made that possible.

Jack Straw: The granting of time for an urgent question is a matter for you and you alone, Mr. Speaker. As for the issue of a statement, there must be a statement this week, and we are discussing with the usual channels which would be the most appropriate day for it.

Zimbabwe

Ian McCartney: With permission, Mr. Speaker, I wish to make a statement on Zimbabwe. I hope that the hon. Member for Cotswold (Mr. Clifton-Brown) and the Liberal Democrats received a copy in good time.
	As the Prime Minister told the House last Wednesday, what is happening in Zimbabwe is appalling, disgraceful and utterly tragic for its people. My noble Friend Lord Triesman, Minister responsible for Africa, noted on 12 March that it was a direct consequence of Mugabe's own approach and of his disregard for the suffering of ordinary Zimbabweans. What we are seeing is a wilful waste of Zimbabwe's assets and potential by a ZANU-PF Government who have substituted plunder and corruption for a programme of economic and social advancement for its people.
	Hunger and malnutrition are all that millions of Zimbabweans now experience in their daily lives, and Mugabe and his regime are directly responsible. They are directly responsible for Zimbabwe's economy being in free fall: the economy shrank by 40 per cent. in less than a decade, and will shrink by a further 5 per cent. this year. Inflation is already at 3,000 per cent., and the International Monetary Fund says that it will breach 5,000 per cent. by the end of this year. They are directly responsible for circumstances in which a quarter of the resident population is dependent on food aid, and a quarter has already fled the country. They are directly responsible for an unemployment rate of over 80 per cent., the third highest in the world. It is little wonder that there has been an exodus over the Limpopo river. They are directly responsible for Zimbabwe's having the world's highest orphan rate, largely as a consequence of the pandemic rate of AIDS: roughly 20 per cent. of adults are infected. They are directly responsible for circumstances in which Zimbabweans can expect to die younger than anyone else on the planet. A Zimbabwean woman today can expect to live to just 34, while a Zimbabwean man can expect to live to 37. However, instead of taking the necessary measures to reverse each of those evolving tragedies, the regime continues to make people homeless, suppress independent media, harass human rights defenders and arbitrarily arrest those involved in peaceful demonstrations.
	The violence and repression used against peaceful protesters gathering to pray for change during the weekend of 10-11 March, during which at least one young person was shot and killed, has continued unabated. Four members of the opposition Movement for Democratic Change have been prevented from leaving Zimbabwe, including one MP, Nelson Chamisa, who was badly beaten when travelling to a meeting in Brussels. I am pleased to note that the MDC's vice-president was able to take his place: we salute his bravery and that of his colleagues.
	A significant number of activists are still being arrested and beaten throughout Zimbabwe. Lawyers representing those who have been detained have themselves faced intimidation. Trade union and student union members have also been harassed and arrested. My noble Friend Lord Triesman summoned the Zimbabwean ambassador to register our disgust,
	As I did during my address to the Human Rights Council on 13 March, I send my deepest condolences to the families and friends of those killed and injured in the last two weeks of terrible assault, and offer my solidarity to all Zimbabweans on behalf of everyone in the House. Mugabe's men might break the bones of the democracy campaigners, but they cannot break the quiet dignity of these extraordinary human beings. One day, Zimbabwe will return to democracy; Zimbabweans will be free. Mugabe knows that. He knows that he has got it wrong, and that the crisis has resulted in an increase in internal pressure. He feels more vulnerable. The involvement of the military in almost all aspects of Zimbabwe life—from running state businesses and economic programmes to agriculture and food distribution—underlines that.
	What does Mugabe do? He blames everyone else, especially us in the United Kingdom. He persistently alleges that the UK is responsible for Zimbabwe's woes—that we are somehow victimising him for his disastrous fast-track land reform policies. That is simply not true. We have always recognised the need for an equitable redistribution of land, but that has to be done in a transparent, legal manner. We signed up to all three of the internationally recognised land reform packages: in 1979, 1998 and 2001. The UK gave a total of £44 million to the first of them. About £3 million was returned unspent in the mid-1990s when the Zimbabwean Government lost interest in proper land reform. We were also willing to support the package put together by the United Nations Development Programme in 2001, but Mugabe's violent land invasions put a halt to that.
	Let us look for a moment at Mugabe's claims that the crisis is down to us. It was his Government—not the UK—who displaced and destroyed the homes and livelihoods of 700,000 people during Operation Murambatsvina, which I understand means "drive out the filth". It is the Government of Zimbabwe—not the UK—who previously refused to appeal to the UN for food aid despite widely reported food shortages. It is the Government of Zimbabwe—not the UK—who have crushed a free media. It is the Government of Zimbabwe—not the UK—who deny Zimbabweans their basic rights of freedom of expression and assembly by routinely and violently breaking up peaceful protests. It is the Government of Zimbabwe—not the UK—who have ignored IMF recommendations to reform an imploding economy. It is they who continue to squander the country's limited foreign exchange while ordinary Zimbabweans can scarcely afford food. It is the Government of Zimbabwe—not the UK—who destroyed property rights by removing land from the legal process. It is they—not the UK—who have ruined the Zimbabwean agricultural sector; agricultural productivity has fallen by a staggering 80 per cent. since 1998.
	Since 2000, more than 250,000 black commercial farm workers have lost their livelihoods. Including families, that means that there has been a rural displacement of about 1 million people, to match the urban dislocation of 700,000. Of course, while the Government of Zimbabwe continue to blame the international community, the European Union and the UK Government for their troubles, in each case we are taking action to improve life on the ground for ordinary Zimbabweans.
	As my right hon. Friend the Foreign Secretary said last week, there is considerable concern throughout the international community about the situation in Zimbabwe. The United Kingdom is greatly concerned about the situation there, but those concerns are shared by the whole of the European Union, by the African Union—sadly, those concerns have not always been expressed as loudly as they might be—by the United Nations and by the rest of the international community.
	Ministers and officials are in constant contact with our African counterparts, emphasising the risks to regional stability and the importance of Zimbabwe's African neighbours taking a more direct role in addressing the crisis in Zimbabwe. The Prime Minister last week wrote to President Mbeki and spoke with President Kikwete of Tanzania on this issue. We recognise the difficulties in challenging Mugabe bilaterally, but without the engagement of the Southern African Development Community, with its commitment to promoting good governance and respect for human rights and the rule of law, the situation will deteriorate further. We therefore welcome the visit of the chair of the SADC Organ on Politics, Defence and Security, President Kikwete, to Harare on 15 March. With President Mbeki of South Africa, he has proposed an initiative to encourage internal dialogue between ZANU-PF and the Movement for Democratic Change on policy reform, but quick progress is necessary if that is to have an impact. Mugabe is a master of denial and delay. The Zambian President has recently called Zimbabwe a "sinking Titanic"—an apt description, indeed.
	On the European Union, despite the claims of Mugabe about illegal economic sanctions imposed by the EU, let us be clear: the EU has no economic sanctions against Zimbabwe. They exist only in his mind. The EU does not prevent western companies, including British ones, from doing business with Zimbabwe, which in fact has a trade surplus with the UK. The EU does have an arms sales ban, and a travel ban and an assets freeze on leading members of the regime. While those targeted measures have had no impact on the Zimbabwean economy, they show that the EU is serious about human rights. Zimbabwean civil society organisations support those measures because they are focused on the destroyers of Zimbabwean society and not on its suffering people. As my right hon. Friend the Foreign Secretary told the House on Tuesday and the Prime Minister repeated the next day, we will look to add to these targeted measures. We are pushing for, and expect there to be, progress on the addition of extra names to the EU visa ban list, again pressurising the regime without impacting on ordinary Zimbabweans.
	On the actions of the UK Government, let the House be clear: we are doing all that we can to relieve the suffering of the Zimbabwean people. The UK is one of the three largest donors to Zimbabwe, and, contrary to the claims of some, that money is making a real difference to the lives of ordinary people in Zimbabwe. For some, that money is quite literally the difference between life and death, and the House should be proud of that contribution.
	In the past five years, the Department for International Development has committed more than £143 million to humanitarian programmes, including food aid, life-saving vaccines, support for orphans and vulnerable children, and agricultural inputs to the poorest farmers. We have also provided £37 million to tackle the HIV/AIDS pandemic. Of the €200 million given by the EU last year, the UK alone disbursed nearly €60 million in bilateral assistance—hardly the actions of a country not interested in the affairs of Zimbabwe; far less one with a bilateral grievance.
	As the Foreign Secretary made clear on Tuesday, our aid is channelled through United Nations and NGO agencies to escape the clutches of the regime. I want to stress that our food aid is not a part of the ZANU-PF programme to use food as a means to force support or to punish opposition. It is also clear that not only are innocent Zimbabweans suffering, but the tragedy in Zimbabwe is having a significant impact on the region: both a direct impact with mass migration, and a consequent social impact in terms of HIV, malnutrition, safety and the education of children, to name but a few factors. As Zimbabwe disintegrates, those impacts will increase.
	The UK shares the region's desire to see Zimbabwe's recovery—there is no other UK agenda. Our concerns are for the ordinary Zimbabweans and their suffering at the hands of a regime determined to pursue policies that hurt rather than help them. We stand ready to help, with our international partners, but only when there is an environment inside Zimbabwe in which that assistance will be effective.
	Until the Zimbabwean regime changes course, we will maintain the international spotlight on them, and increase Mugabe's isolation. In that vein, I welcome France's decision not to invite Mugabe to the February France-Africa summit, which sent a clear signal that this woeful governance will not be tolerated. However, as I and others, including the Prime Minister, have made clear, the Zimbabwean crisis cannot be solved by the UK. Those sentiments were echoed by the opposition leader, Morgan Tsvangirai, who told the BBC on 18 March:
	"I have repeatedly said that the British government cannot be seen to be at the forefront in confronting Robert Mugabe alone. I've always said that that will be misconstrued as a colonial resuscitation of the same situation again. So I always say that Britain, together with the rest of the international community, the African Union, and the rest of the international community have to act together."
	So we in this House and elsewhere must be careful that, while expressing our outrage at recent events and at the downward spiral of Zimbabwe, we do not do or say anything that will hand a propaganda tool to Robert Mugabe. We will continue to exert pressure in international forums, including the United Nations —we expect a tough EU statement on the Human Rights Council this week, and a humanitarian briefing on the UN Security Council next week—the African Union and the European Union, and with international partners, until democracy is restored to Zimbabwe. We will continue to do everything that we can to ensure that whoever governs Zimbabwe does so in a way that guarantees a better future for all Zimbabweans: a democratic and accountable Government, and policies that ensure economic stability and development, not humanitarian misery.
	My generation was the first to be born not as children of the empire, but as children of the Commonwealth. When I first became involved in political life, the struggle against colonialism, and the struggle of the peoples in southern Africa who were subjugated by racist regimes, were an inspiration to me and to my generation. As time went by, we celebrated as Rhodesia became Zimbabwe and the fighters came out of the bush to create a new democratic future for their people.
	That is why it is so hard for me personally to watch what is happening in Zimbabwe today. Uniquely, the people whom we once cheered as liberators are now the oppressors who have taken away the voice of the Zimbabwean people. Brave Zimbabweans are speaking up for their freedom. They are looking to their African neighbours to help. We are playing our part in the international community.
	In 1980, Zimbabwe proudly proclaimed its independence. Tragically, 27 years later, its people have still to gain their freedom.

Geoffrey Clifton-Brown: I thank the right hon. Gentleman for the generous amount of time that he allowed the Opposition to have advance sight of his statement. I am sure that the whole House will join him in his condemnation of the Mugabe regime. Like the rest of the international community, we have been shocked by the regime's brutal tactics, the country's chronic food shortages and staggeringly high inflation and unemployment, and the increasing Government repression of all forms of dissent.
	All Zimbabweans are suffering as a result of the Government-made, deteriorating economic, political and humanitarian situation, which has now become so desperate that Archbishop Pius Ncube, the Archbishop of Bulawayo, said last week that he was
	"ready to stand in front, even of blazing guns"
	to force President Mugabe to step down.
	I turn to some specific questions. Does the right hon. Gentleman agree that the international community's response to 27 years of Mugabe misrule, although well intentioned, has been unable to prevent the situation from deteriorating, and that decisive action is now needed? Is not it the case that, although the Government have done the things the Minister outlined today, they could have done more? What we are looking for now is that all his good words in the House today are matched by action.
	I welcome the Minister's statement that the UK is pushing for additional EU sanctions. Will they include widening the scope of the assets freeze? We have heard the rumour that the financial sanctions currently affect only 400 bank accounts, covering £210,000. Surely the Government could do more in that respect.
	Will people who have residence and visitor's permits in the UK and who are on the list of banned people have their permits and passports withdrawn? Will the Minister assure the House that no member of ZANU-PF, including President Mugabe and anyone on the EU sanctions list, will be invited to the EU-AU summit in Portugal later this year? If they were, it would make a mockery of the travel bans.
	Will the Minister urge Zimbabwe's neighbours to make a concerted effort to resolve the crisis, and to exploit their many points of influence with the Mugabe regime? Will he now make the case that the consequences of a total collapse in Zimbabwe will fall heavily upon them and their regimes, and will he urge them to put pressure on the Mugabe regime to block the extension of his rule and engage in talks with the Opposition? Can he confirm that the UK is strongly conveying that message, particularly to the Government of South Africa? Is not it vital that the international community present a united front in pursuing a clear strategy that increases the penalties on the Mugabe leadership? Could he have a system of incentives and disincentives clearly linked to sanctions, so that the international community can ratchet up their actions? Can he confirm reports that the UK, along with other nations, is working with moderate members of ZANU-PF to discuss the possibility of agreeing a power-sharing transitional Government? Does he agree that any change in the Government will ultimately come from the actions of the Zimbabwe people themselves? Finally, does he agree that the international community should stand by, ready and planning to work as partners to lift and help Zimbabwe out of the unimaginable poverty in which it finds itself today as soon as genuine partners with whom we can work in Zimbabwe emerge?
	Does the Minister agree that, like the iron curtain around the Soviet Union, once the tide starts flowing, it is unstoppable? Is not it high time for the 83-year old Mugabe to retire now?

Ian McCartney: I thank the hon. Gentleman for his positive statement of support for the Government's strategy. All of us in the House, whatever our political persuasion, want to do everything possible to ensure engagement with South Africa and other front-line states, which is why the steps taken by the Presidents of Tanzania and South Africa in the past few days are important.
	The hon. Gentleman is right to say that it is important that Mugabe see that it is not just the west, and Britain in particular, that is trying to get a regime change: it is a matter for the Zimbabwean people and those in the region. When Mugabe goes, he must be replaced with a regime that respects human rights and human dignity, and has the capacity to represent the interests of all Zimbabweans and all civil society.
	The hon. Gentleman is right about another matter. Alongside working in that respect, it is important that the international community have a twin-track approach. It is important that Zimbabwe should not implode when its leadership changes. That means working as a united force—the UN, the south African states and the European Union—to ensure that, alongside the transitional change, arrangements are in place, first, to stabilise the country, and, secondly, to ensure that the transition benefits the Zimbabwean people and does not result in further dispersal, dispute and violence. It is important that we do those two things together.
	On the targeted measures that the hon. Gentleman raised, I made it absolutely clear that we want to see further targeted measures and we are discussing that with our European Union colleagues and others. It is important that we do so. I will keep the hon. Gentleman and the Liberal Democrat spokesman informed—it is not a secret. As the hon. Gentleman acknowledged, I want to work with every party in the House to ensure that maximum pressure is put on the regime. That means working together and trusting each other to get the best result for the Zimbabwean people. That includes the issues about targeting.
	The hon. Gentleman did not raise this point, but in the context of targeted measures, it is important to remember that, as well as a travel ban—I hope that we will add names to the travel ban—there is also an issue about some of the children the regime benefits from. As well as adding other names, it is important to consider seriously whether the children of the worst offenders should be included on the list. I assure the hon. Gentleman that we will consider that.
	Let us be quite clear that it is critical that the EU-Africa summit take place, because we want to discuss good governance, regional peace and security, development and integration, education, health and immigration in Africa as a whole. We should not let Zimbabwe or Robert Mugabe capture that important agenda. I said what I said about France for a specific reason, and I want to be absolutely clear about it: I want the summit to take place—not as a platform for Mugabe, but as a platform for Africa to work with the European Union. The summit does not take place till November or December, so we should not make hasty decisions. We should work with our colleagues who will have the presidency at that time—the Portuguese Government—to ensure that the EU-African Union summit takes place. I hope that there will be a place there for Zimbabwe, but a different type of Zimbabwe.

Kate Hoey: Will my right hon. Friend say whether the Secretary of State found out anything more about the Angolan troop situation? Does my right hon. Friend share my regret at the seeming reluctance of the Commonwealth Secretariat to engage in Zimbabwe? Zimbabwe did not leave the Commonwealth; she was abducted by Mugabe, just as South Africa was abducted by Verwoerd. In the case of South Africa, the Commonwealth never accepted the abduction. The then Prime Minister of Canada said:
	"We shall leave a candle in the window for South Africa."
	Why does my right hon. Friend think that the Commonwealth Secretariat has been unwilling to leave a candle in the window for Zimbabwe?

Ian McCartney: I checked up on the reports about Angola, because it was important to do so. The Angolan authorities tell us that the reports are completely false, but I know that hon. Members raised the issue legitimately and in the right spirit. We went back to our post in Rwanda and spoke to the Angolan authorities who said—I repeat—that the reports about troops were false.
	We are working actively with the Commonwealth Secretariat. It is critical that not just the Commonwealth Secretariat, but our colleagues in the Southern African Development Community and in the African Union, along with us in the European Union, make progress over the coming days to get the dialogue going about the situation in Zimbabwe so that it can move on to a new leadership, new politics and a new type society. As I tried to outline in my remarks to the hon. Member for Cotswold (Mr. Clifton-Brown), that should be done in a way that does not undermine further the ability of Zimbabweans to see through the crisis and get to a different place.

Michael Moore: I echo the comments of the hon. Member for Cotswold (Mr. Clifton-Brown) in thanking the Minister for an advance copy of the statement. The Minister has made a powerful case against Mugabe this afternoon and the whole House will be grateful to him for doing that. He did not pull his punches in his description of Mugabe's monstrous regime. I invite him to be more robust about the countries of southern Africa. Frankly, people are despairing at South Africa's softly-softly approach, in particular. Notwithstanding what the Minister said about Angola, it is alarmed by the past week's reports of closer security co-operation between the two countries.
	Does the Minister agree that despite the sensitivities—we accept that humanitarian briefings in the Security Council are important—Britain has to force the pace on extending sanctions not only in the European Union, but at the Security Council, so that Mugabe and all his regime can be held to account? It has been reported today that to facilitate Mugabe's political demise, he might get some sort of deal letting him off the hook for all his crimes against humanity, which would surely be an appalling prospect for all of us. Will the Minister confirm that neither the United Kingdom nor the European Union would support such a tawdry arrangement?

Ian McCartney: Let me take the hon. Gentleman's last point first. We are not holding discussions about giving immunity to Mugabe or any other member of the regime. However, our first act must surely be to assist efforts internationally and in the region itself so that we get to a position in which Mugabe is no longer in power. However, that should be achieved by the Zimbabwean people with the support of the international community. That will be an important first step, yet what happens after that, in terms of our contingency planning, ongoing support for the people of Zimbabwe and the problems flowing from the excesses of the regime, is important. I am not dodging the question, but as the hon. Gentleman indicated, we must ensure that South Africa and the other countries in the region—this is critically important—and China and other countries are in a position in which they will come along with ourselves and the European Union on multilateral action to resolve the situation in Zimbabwe once and for all. That is the priority. We must not provide anyone with a loophole or a bolthole so that things become more difficult than they are at the moment.
	We will take each step in turn. The first step is to get momentum going with regard to what the hon. Gentleman said. That was why I was robust in negotiations to ensure that the Human Rights Council, which is sitting at the moment, debates Zimbabwe before its session breaks up in June. It will be important for us to pursue the matter in the Security Council early next week—of course, South Africa is its chair at the moment. Over the next few days, it will be critical for us to maintain our pressure on the international community to come together on Zimbabwe.
	The hon. Gentleman asks us to be robust. I am robust as any Member, but I am acutely aware that I want to be robust in such a way that it will make a difference. I do not want to be robust and thus give someone an excuse. It is easy to get a clap or a nod of approval in here. As I said in my statement, we should not say or do anything that would give anyone the opportunity not to participate in this international effort to rid Zimbabwe of Mugabe.

Jim Cunningham: What countries will be represented at the regional conference and what issues will actually be discussed? It has been a long time since we first started thinking about tightening up the sanctions. Why has it taken so long to do that?

Ian McCartney: The European Union sanctions are a matter for the EU as a whole. We will have to wait to find out what comes out of the debates in the Human Rights Council and the Security Council. However, my hon. Friend can rest assured that from our perspective, as I said in my statement and in reply to the hon. Member for Cotswold, we want to maximise our ability to extend the bans and to examine other measures. We want to take colleagues with us. It is important that the action is multilateral and that it is seen that that action is being taken by the international community, not just by ourselves.

Iain Duncan Smith: I served in 1979 to try to bring Zimbabwe back to democracy and I am horrified by the state that we are in now. I must say to the Government that I think that we have dragged our heels unnecessarily over the years. Does the Minister agree that surely the time has come to deal directly with South Africa and the other neighbours and to say to them very simply, as a process of limit diplomacy, that it is time for them to put real pressure on Zimbabwe? If they do not do so, perhaps we should examine again the programmes, such as aid programmes, that are going in their direction and say, "It's a two-way street. Either you act, or we act."

Ian McCartney: I recognise the right hon. Gentleman's contribution in his previous roles, but I disagree entirely with his last remark. I am all for putting increased pressure on people in the region to take their responsibilities seriously, and that is why, as I said, the Prime Minister has already been in contact with President Mbeki and has already had discussions with the President of Tanzania, and there will be other such discussions to follow. However, what we cannot and will not do is withdraw our important international aid activity, whether it is dealing with HIV/AIDS in South Africa, or with pandemic AIDS and TB. We will not take action against the ordinary citizens of any country in Africa simply to get at Mugabe's regime. That is playing entirely into his hands, and that is the kind of suggestion that I tried to allude to earlier. Such suggestions are not only unhelpful, but are nonsense, given what we are trying to do.

Sally Keeble: In view of reports that ZANU-PF might itself move to get rid of Mugabe, will my right hon. Friend set out the principles that the UK Government and others will expect from an incoming Government, particularly in respect of the move to full and free elections in Zimbabwe? Some of us are concerned that people in ZANU-PF who have benefited greatly from the regime might try to ensure regime change to protect their own position, whereas most people, obviously, want a move to a truly democratic Zimbabwe, with a return to peace and security for the millions of Zimbabweans.

Ian McCartney: I am absolutely certain that there are some people within the regime who would like regime change but who would like to simply carry on with the policies that have led Zimbabwe to a position of international isolation. That country, which was able to feed itself, and which used to be the bread basket of Africa, now cannot even feed its own nation, and has an AIDS pandemic and a life expectancy of 34 years for a woman, and 37 years for a man.
	Let me be absolutely clear that any regime change, which has to come from inside and not outside the country, has to result in a Government who recognise the human rights of all their citizens, who recognise opposition and the freedom of the press, who have the capacity to work with the international community to rebuild their shattered economy, and who have the ability to treat with respect and dignity all the people in Zimbabwe who want to make a contribution to the rebuilding of their country. No individual or organisation can simply take over and carry on as before. That is why it is important, as I said to the hon. Member for Cotswold, that alongside that effort, a second effort is made—an effort on the part of the international community to provide contingency plans on what support we can give to ensure that changes in government, and any transition that takes place, are sustainable on the grounds that I have set out.

Angus Robertson: In associating the Scottish National party and Plaid Cymru with the Minister's description of the woeful circumstances in Zimbabwe, may I press him for details of the plan that he has mentioned a number of times? Surely it will take a plan of Marshall plan application to make a real difference to the country when regime change takes place. Does he not think that it is time to tell the people of Zimbabwe about the degree of commitment outside the country to helping them back to the circumstances in which they should live?

Ian McCartney: I thank the hon. Gentleman for his remarks of support from the nationalist parties, and I accept them in the spirit in which they were made. Contingency planning is at an early stage, and I do not want to give the impression that I have an all-singing, all-dancing plan. What I am trying to allude to is the fact that, as well as bearing in mind the diplomatic issues to do with the regime, it is important that we do not simply wait until there is potential regime change, or indeed until there is a collapse, with all its consequences. We can already see the stresses and pressures on the front-line states around Zimbabwe as a result of migration and issues related to it. It is important that the international community, including the European Union, the United States and other large donors to Zimbabwe, think through what our contribution will be to assisting the transition to a democratic society and, with that, to preventing full-scale humanitarian disaster from occurring. That will be a huge effort.
	For example, there are large numbers of elderly people in Zimbabwe, and given the collapse of the care system in Zimbabwe, what do we do to prevent those elderly people from becoming victims of any collapse? What do we do with young children, and what do we do in terms of restructuring, and in terms of those millions of people who have already left the country, and who need to return to be effective there? If they are to do so, a stable, incoming Government are needed. All those issues to do with contingency planning must be considered, as well as the issue of how the international community can best provide support for any new regime that takes over.

Keith Vaz: What discussions has my right hon. Friend had with the Home Secretary about the position of Zimbabwean citizens in this country? Last Friday at my surgery, three Zimbabwean citizens who had received letters from the Home Office asking that they be returned to Zimbabwe came to see me. They believe that they will be killed if they go back. Surely, now is the time, especially in view of my right hon. Friend's statement, at which we should not return people to that dreadful country. Will he meet the Home Secretary to discuss that as a matter of urgency?

Ian McCartney: There are no forced returns of failed asylum seekers to Zimbabwe currently. Returns are suspended until the Asylum and Immigration Appeals Tribunal has made its judgment on a Court of Appeal case. We will continue to defer returns to Zimbabwe until that case is concluded, but we also continue to expect Zimbabweans who have no right to remain in the UK to leave voluntarily, and we encourage them to take advantage of the generous return and reintegration package. I do not have any details of my right hon. Friend's case, but if he sends them to me, I will deal with it personally in the way in which he has asked me to do.

Alistair Burt: There are some 5,000 pensioners living in Zimbabwe who are world war two veterans and veterans of service with the Crown. Many of them are well over the age of 85, and they are being kept alive by charity. If there is a collapse of government and energy supplies, they will be at risk not within days or weeks but almost within hours. In addition to the measures that the Minister discussed a moment ago about longer-term contingency plans, can he assure the House something will be put in place almost immediately, because a collapse could take place tomorrow or the next day, and people will be vulnerable immediately? Are there plans for immediate support for people who look to Britain for support now, as they gave service to Britain so long ago?

Ian McCartney: I thank the hon. Gentleman, again, both for his question and for the tenor of it. I alluded in a previous answer to the fact that a key area for us is the elderly, and some of them are exactly the type of individual citizen to whom he referred. Given that assurance, the question of how best we can deal not just with the situation now but one that deteriorates even further is under active consideration. We are providing assistance at this moment in time, particularly in private care homes, where there are extreme difficulties, as the continuation of funding is a problem. The matter is a priority for our high commissioner, who is looking both at what we can do in contingency terms inside the borders of Zimbabwe and at what other actions need to be taken in those situations where people are extremely vulnerable.

Chris Bryant: When Chile suffered under the similarly brutal Pinochet dictatorship, we discovered that many British companies had been involved in providing the paraphernalia of repression to that Government—things such as riot police training, tear gas and so on. Is the Minister absolutely certain that no British company or British-domiciled person is in any way providing the paraphernalia of repression to Mugabe's regime, and will he make sure that no other European country takes part in that repression, either?

Ian McCartney: There is an EU arms embargo, and it is critical both here and throughout the EU that companies respect it. It would be a breach of the embargo not to do so, but if my hon. Friend has any evidence of such action, I will investigate it. However, as far as we are concerned, there is a strong embargo that will remain in place and we may consider extending it.

Nicholas Winterton: The right hon. Gentleman has made the most outspoken criticism of the Mugabe regime that I have ever heard from a Minister in the House, and I congratulate him on it. Does he not agree that Mr. Mugabe has lost the support of the civilised world? He has lost the support of the overwhelming majority of African countries and of the majority of his own people—and even the majority in his own party—and is merely supported by a minority in his party. Can we not take a genuine initiative in dealing with African countries to indicate that we will do our best to help, if requested, in the supervision of free and fair elections in Zimbabwe, to help with food aid and all the other necessary things to help to remove the suffering of the people?

Ian McCartney: For the second time in a week, I thank the hon. Gentleman for his kind remarks. There is nothing in his remarks that I disagree with. That is precisely what we are trying to do, in a multilateral way, where we play a very effective part, in order, first, to achieve democracy, secondly, to rebuild the country, and thirdly, to sustain the aid and support that we are giving and to extend that internationally. Fourthly, I cannot overemphasise the desire from the Prime Minister downwards in this regime to encourage South Africa and other front-line states to come up to the plate now. I am certain that that is happening. The important thing for us is to support it and take it forward, as I suggested in my opening statement and in my remarks since.

David Howarth: Further to the question from the right hon. Member for Leicester, East (Keith Vaz), may I bring to the Minister's attention the fact that I have a constituent who is still threatened with deportation to Zimbabwe? He is a man who is suffering from serious mental illness. As far as we can tell, there are no mental health facilities at all in Zimbabwe at present. Home Office Ministers have refused even to meet me about the case. If there is such a suspension as the Minister referred to, will he make sure that Home Office Ministers know about it?

Ian McCartney: I understand the hon. Gentleman's frustration, but as I said to my right hon. Friend the Member for Leicester, East (Keith Vaz), I do not know the circumstances of the case. Irrespective of my ministerial responsibilities, I will raise the specific case with my Home Office counterparts. Hon. Members are entitled to see Ministers, whatever their responsibilities. There is an open-door policy in that respect. I will take back the hon. Gentleman's remarks and ensure that he receives an appropriate response from the Minister concerned.

James Duddridge: Can the Minister confirm that Robert Mugabe's daughter, Bona Mugabe, is currently studying at the London School of Economics, and if so, can he say who is paying?

Ian McCartney: On the first part of the hon. Gentleman's question, I understand that that is the case. On the second part, I am not certain so I cannot answer. I will write to the hon. Gentleman and place a copy in the Library of the House. In response to the hon. Member for Cotswold I said, without prompting, that we should seriously consider extending the travel ban to children and other members of the family.

Andrew MacKay: The Minister should be warmly commended for his robust criticism of the Mugabe regime and for pointing out that all the failings of Zimbabwe, which are causing such harm to its people, rest entirely with Mugabe and not with us or previous colonial rule. Does the right hon. Gentleman consider it significant that the Archbishop of York, who has huge regional experience, has said that South Africa is in denial on these matters?

Ian McCartney: What the archbishop has done has been very helpful. Over the past few days and weeks—I do not mean just the past 10 days or the past fortnight—he and others have increasingly been speaking up and speaking out, demanding of South Africa and cajoling South Africa to take a more proactive role. That is exactly what has been happening in the past few days. That is why we must maintain and develop a relationship. That is why the Prime Minister has written to President Mbeki and why we have had discussions with the President of Tanzania. Further discussions will take place. It is critical, as the right hon. Gentleman said, to move to a point where those in the region take responsibility to assist the process of Mugabe leaving and getting a democratic, accountable Government in place.

John Barrett: If the Mugabe regime comes to an end or if for any other reason there is free access to deliver humanitarian aid on the scale that it is required in Zimbabwe, what plans are being put in place now to make sure that there can be a rapid increase in the level of that aid?

Ian McCartney: I thank the hon. Gentleman for that question. On 23 March, we hosted in the Foreign and Commonwealth Office a meeting of 10 countries to discuss contingency planning—the United Kingdom, Germany, Sweden, the Netherlands, the United States, Canada, Australia, Norway, New Zealand and the European Commission. Those are the key donors in the region and also those which have representation in Harare. So we are already thinking about the twin-track approach that I spoke about in my statement.

Patrick Cormack: Will the Minister consider talking to the Foreign Secretary, because one of them should go to South Africa during the forthcoming recess with the Archbishop of York to talk to Nelson Mandela, Desmond Tutu and other prominent South Africans who have spoken out to try to put some pressure on the South African Government, who have the key?

Ian McCartney: To stop the hon. Gentleman fretting, I should say that I speak to the Foreign Secretary every day on a range of matters. [Hon. Members: "Commiserations!"] Hon. Gentlemen should not be so churlish. There will be a range of diplomatic activity, as there is now, and it will include ministerial involvement. As part of what I have promised the Conservative and Liberal Democrat Front Benchers, I will keep them abreast of continuing events, including ministerial engagement.

Douglas Hogg: May I ask the Minister whether officials have consulted the International Criminal Court on whether charges can be formulated against Mugabe and his chief lieutenants? Although that might not lead to an actual prosecution, it would be a deterrent. On any view, Mugabe's activities, while not as grave as those of Milosevic, are similar in kind.

Ian McCartney: That is a similar question to the one asked by the Liberal Democrat Front-Bench spokesman, the hon. Member for Berwickshire, Roxburgh and Selkirk (Mr. Moore), although perhaps it is more direct. The ICC is the next stage; the first stage, which we must concentrate on, is the process of engaging with front-line states and people internally in Zimbabwe to get a new regime and a new Government following agreed democratic principles. Any issue that arises after that will be for discussion. This Government are the biggest supporter of the ICC. We have already resisted efforts not to have it operate in Darfur—where there has been clear potential for its activities—and in northern Uganda and other areas. We are big supporters of the ICC, but I would rather not speculate at this stage, when the priority is clearly the international effort working with South Africa, Tanzania and others to ensure a transition from Mugabe to democratic government in Zimbabwe.

Andrew Robathan: Although I commend the Minister for his robust condemnation of the Mugabe regime, I am not alone in the House in thinking that the statement was one of the most empty that I have heard. I ask for specific action. I have a report that a Chinese-registered ship docked last week in Mozambique at Beira and off-loaded small arms destined for Harare. I have another report that a team of Israelis are going to Harare to advise on demonstration control and that, furthermore, they are sending tear gas from Israel to Harare to support the Government there. Will this Government investigate whether those reports are true, and if so raise the matter at the highest level with the Governments of Mozambique, Israel and—[Hon. Members: "China"]—China? Will they also ensure that such matters are raised at the United Nations and by the European Union, too?

Ian McCartney: The hon. Gentleman was rather churlish in saying that the statement was empty: helping to keep millions alive with £120 million-worth of aid is not empty rhetoric; helping to fight Zimbabwe's AIDS pandemic is not empty rhetoric; supporting all those working for democratic change is not empty rhetoric; helping to isolate Mugabe on an international basis is not empty rhetoric; pressing the African Union to support efforts to allow the people of Zimbabwe to remove Mugabe is not empty rhetoric; and pursuing the United Nations to increase pressure through the Security Council and the Human Rights Council is not empty rhetoric. The hon. Gentleman can by all means criticise, but he should do so on the basis of logic and not make partisan political points.

Ann Winterton: The Minister will be aware, as is everyone, that Zimbabwe is on the brink of both economic and institutional collapse. Is he aware that this could bring the country to collapse much more quickly and that, given what he said, we are apparently unprepared for what might happen? If at its meeting this week ZANU-PF's central committee refuses to have Mugabe as the sole candidate in the forthcoming elections, and if at its own meeting in Tanzania the Southern African Development Community then votes for change, collapse would come even more quickly. What is the free western world going to do to help the people of Zimbabwe in these circumstances?

Ian McCartney: I thank the hon. Lady for her question; her points are well made. Such points are why I set out in my statement what we are doing and will continue to do, and the contingency planning that I set out in the meeting that was held in my Department on 23 March. We are well aware of the movement in the situation. Hon. Members may rest assured that all that we can do, ourselves and by working with the international community, will be done.
	The infrastructure in Zimbabwe is now significant, and we are putting in significant resources. I do not in any way underestimate the difficulties that would be caused, not just in Zimbabwe but across the region, if the country were to go into free fall. That is why it is critical that we work in unison with the region to get a transition from Mugabe to a new Government in a way that does not cause total disruption or a complete implosion of society in Zimbabwe, difficult though that is. I assure the hon. Lady that all our efforts and aims are to that effect.

John Bercow: When visiting Zimbabwe in February 2004 I was privileged and inspired to meet the distinguished human rights lawyer, Beatrice Mtetwa. Given that on only Tuesday of last week Beatrice was again brutally assaulted by police officers when seeking to serve court papers on them, is it not now time that South Africa led a united international community in issuing to Robert Mugabe a very simple message: "Quit now and count your lucky stars if members of the MDC are willing to be bigger in dealing with you than you have ever been in dealing with them"?

Ian McCartney: The hon. Gentleman takes a great deal of interest in these issues. The lady concerned is an extraordinary person; every day could be her last. Such is the regime's disregard for human rights that it is not just those who want to campaign for rights; the attack is on the defenders of human rights too. That is why we have put substantial financial resources into supporting those human rights defenders—in addition to the other resources. I do not say that in a partisan way; I just want to make it clear that we are helping to resource their activities as well.
	In the past few days, South African Minister Pahad made a substantial move forward, saying:
	"South Africa urges the Zimbabwean government to ensure that the rule of law including the respect for rights of all Zimbabweans and leaders of various political parties is respected".
	They seem few words, but in terms of what has gone on in the past they represent a significant step forward. We hope to build on that, particularly in view of what the Prime Minister has set out in his letter to President Mbeki, and the discussion and debate that we are having with the South African Government at various levels and with the President of Tanzania.

Tony Baldry: Further to the question raised by my right hon. and learned Friend the Member for Sleaford and North Hykeham (Mr. Hogg), the arrest and arraignment before a UN international court of Charles Taylor of Liberia creates the clear precedent that no Head of Government or Head of State is immune to trial by the international community for crimes against humanity.
	The Minister may reflect that he might send out the wrong signal. It needs to be made very clear that Mugabe could be arraigned before the International Criminal Court for crimes against humanity. That is not a matter for us; it is a matter for the ICC. The fact that he is a Head of State or a Head of Government no longer gives him immunity, and we must make it clear that where Heads of State or of Government trespass beyond what is acceptable in the 21st century, they will be brought to justice, as, hopefully, will Charles Taylor of Liberia.

Ian McCartney: I do not think that I could be any clearer about the Government's support for the ICC. Its creation means that for the first time the world community is saying, in international terms, that there is no impunity for some of the activities of the most despotic leaderships of the world. That is why we took action in accepting international responsibility for Taylor when his trial comes and for the end of the trial; why we have been so firm with the Justice Minister and others in Darfur about their responsibility to work with the ICC; and why we have been so firm as regards the situation in northern Uganda. This Government are at the forefront of supporting the ICC. As for sending the wrong signal, the first signal that we need to send concerns the need to get a transition from Mugabe's regime to a democratic regime and to do so not in a way that undermines its people's capacity to have a country that does not implode but that, with international support, goes from strength to strength in very difficult circumstances.

Henry Bellingham: There are 4 million Zimbabweans in political exile abroad, 295,000 Zimbabweans were displaced during the farm seizures, and a staggering 700,000 were internally displaced during Operation Murambatsvina. Surely one of the key issues is that of protecting the votes of those Zimbabweans in future elections.

Ian McCartney: The hon. Gentleman is right. That is why it is critically important that, working with the international community, any change in regime is to a Government whom we recognise as democratic and accountable to the citizens of Zimbabwe, and where there is a fully fledged Opposition working in the context of free, transparent elections. That is all part of the process. In the coming weeks and months, the first priority must be to ensure that we are able to take forward the momentum of South Africa's and Tanzania's engagement to secure a future for the Zimbabwean people that excludes Robert Mugabe.

Daniel Kawczynski: If there is a total collapse in Zimbabwe, what specific plans does the Minister have for the 12,000 British citizens who live in that country? When will his Government finally take way Mugabe's honorary knighthood?

Ian McCartney: The honorary knighthood was given in 1994 by then Prime Minister Major. It is a source of angst and something that we may want to consider at some point. However, it is a third order issue in relation to the issues that we need to resolve. It sounds good, but it is a bolthole, and we must try not to provide Mugabe, or any of his supporters inside or outside the country, with any bolthole, but concentrate our efforts on having a regime that will take on responsibility for the citizens of Zimbabwe in a democratic way.
	I cannot make any plainer the contingency planning that we need to do as an international community. This is an evolving situation. However, I gave the House a commitment, and I give it again: I will come back to the House as the situation evolves. In the meantime, I will keep Opposition Front Benchers in constant touch with what I and other Ministers are doing.

Point of Order

Nicholas Winterton: On a point of order, Mr. Deputy Speaker. The integrity of this House is very important, as I am sure you would agree. I understand that over the weekend there was publicity about a certain report by the Standards and Privileges Committee, which may well be published tomorrow, about the use of banqueting facilities in this House. Is it right that a report that has not yet been made to the House should become public knowledge? I ask you to investigate.

Mr. Deputy Speaker: It will surely be taken as a serious matter, but it must in the first place be for the Committee itself to investigate whether its confidentiality has been breached.

Orders of the Day

Order read for resuming adjourned debate on Question [21 March].

AMENDMENT OF THE LAW

(1) That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance.
	(2) This Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—
	(a) for zero-rating or exempting a supply, acquisition or importation,
	(b) for refunding an amount of tax,
	(c) for any relief, other than a relief that—
	(i) so far as it is applicable to goods, applies to goods of every description, and
	(ii) so far as it is applicable to services, applies to services of every description.— [Mr. Gordon Brown.]
	 Question again proposed.

Budget Resolutions and Economic Situation

David Miliband: I am delighted to open this third day of the Budget debate on the economy and the environment. It provides an opportunity to explore two key themes that will be central to our prosperity in the years ahead: first, the drive to build a low-carbon economy at home; and secondly, the need to maximise our contribution to the development of effective systems for emissions reduction around the world.
	The Budget took important steps forward on curbing domestic emissions and contributing to international emissions reduction. It complemented measures in previous Budgets and pre-Budget reports, the Climate Change Bill and European negotiations. It set the stage for further measures in the next few months in the waste strategy, the energy White Paper and international discussions and negotiations, first in the G8 plus 5 in June and subsequently in the United Nations framework.
	Vice-President Al Gore said— [Interruption.] The hon. Member for Cambridge (David Howarth) says that he spoke to him yesterday. I congratulate him on his choice of dining partners. The vice-president, who is recognised as an authentic voice on climate change, said that United Kingdom citizens should be proud of their record in contributing to the global fight against climate change. The starting point for the debate is, therefore, the UK's record so far and international evidence on the science and politics of climate change.
	UK greenhouse gas emissions, including emissions trading in 2005, the latest date for which data are available, were nearly 19 per cent. below their 1990 levels. The figure for carbon dioxide is 11 per cent. Since 1997, greenhouse gas emissions, including reductions achieved through the European Union emissions trading scheme, are down by 11 per cent. For carbon dioxide, the reduction—including through the EU ETS—is 4 per cent. Only the countries of central and eastern Europe, the economies of which have undergone a process of restructuring since 1990, match the UK for the scale of emissions reductions.
	Our carbon reduction goals have not been fulfilled through economic austerity. In this country, we have enjoyed 58 successive quarters of economic growth. Our inflation, according to the internationally recognised measuring standard, has been the lowest in the G7 countries in the past 10 years. Since 1997, our interest rates have been half the 11 per cent. average of the previous 20 years. Employment is at a record high, and, all the while, greenhouse gas emissions have fallen. In other words, we have given the lie to the old choice of environment versus economy.

Martin Horwood: The Secretary of State is proud of the Government's record, but is not a large part of meeting the targets due to the dash for gas? Is not the trend in CO2 emissions and greenhouse gas emissions as a whole now upwards?

David Miliband: The latest figures for the household sector show that emissions are declining. I am happy to address the question about the dash for gas. It is true that the switch to gas reduced our CO2 and greenhouse emissions, in the same way that rising gas prices in the past three years have led to an increase in CO2 emissions.

Peter Ainsworth: Anyone listening to the Secretary of State might be misled into believing that the Government were meeting their environmental targets. Can he name a single target, other than the Kyoto target, which is being fulfilled largely because of the dash for gas, that is being met? What about the renewables target, the energy efficiency target, the biofuels target?

David Miliband: What have the Romans done for us other than created a new civilisation? Other than fulfilling the international standard, which is to reduce our greenhouse gas emissions by 12.5 per cent., I am happy to provide examples. What about our recycling commitments? When we came to office, this country was rightly perceived as a throwaway society, with 4 or 5 per cent. of waste going into recycling. The figure is now 27 per cent., which beats the target that we set. I am sorry that the hon. Gentleman has decided to start the debate in a rather churlish spirit because he and I agree that the UK has a good record by international standards, but that it has to do better. It would better become him if he admitted that.
	The old choice was between the environment and the economy. The new choice is between low and high carbon development. Reducing emissions powers our economy forward, with 400,000 people working in environmental industries, compared with 170,000 only five years ago. Venture capital is moving into environmental industries, with London's alternative investment market becoming the market of choice, listing more than 60 clean technology companies with a combined market capitalisation of more than £4 billion.
	Meanwhile, Lehman Brothers—[Hon. Members: "It is pronounced "Leeman."] I say "Leyman", they say "Leeman"—I think we are talking about the same company.  [Interruption.] Since I am British, I pronounce it "Leyman"; since they are American, they pronounce it "Leeman". However, we are talking about the same company of Lehman Brothers—the distinguished bank, which, I am pleased to say, has many operations in this country. It states that climate change is inexorably becoming one of the major forces that shapes business, and that that presents new opportunities and enables new business to appear and develop. But while we have broken the link between economic growth and carbon growth, we know the country as a whole—Government, businesses and individuals—has to do better. That is the rationale behind the climate change Bill, which I look forward to debating in the House, and also for the measures in the Budget and further measures to come.

David Heath: I want to ask about aggregates tax. The right hon. Gentleman and I agree that we need to reduce the use of non-sustainable resources, but given that the prime driver is transport costs, is there any evidence to suggest that the aggregates levy has actually reduced the take of virgin stone or increased the use of recycled stone? Will not removing the direct environmental benefit for the local communities affected by quarrying create a pointless levy?

David Miliband: The short answer to whether there is any evidence is yes, but it might be best if I write to the hon. Gentleman to provide the extensive details, some of which, I think I am right in saying, were published in the Red Book last week. They show some of the changes made, but I will happily write with further details.
	For the UK, there are four main sources of greenhouse gas emissions: electricity, heat, transport and waste disposal. Each needs to be addressed by a combination of Government, business and individual action. That is what the Government are determined to do. Let me start with electricity and heating supply.
	It is remarkable that we can deliver more than 1 million tonnes of carbon reduction from the decision to make the UK the first country in Europe to phase out all high-energy light bulbs. Further significant reductions will come from consumer electronics and from reducing the power consumed in wasteful standby mode. Renewable energy, including wind energy, will cut carbon and a continued nuclear contribution is also important. "Wait and see" is not a sufficient policy in this area, but to drive down energy-related emissions we need to go further in respect of the business sector and households.
	The business sector accounts for 40 per cent. of all carbon emissions. I am pleased that large businesses and large emitters are now covered by the European Union emissions trading scheme, covering nearly half of all carbon emissions in this country—and more than half if aviation is included. For medium emitters, we are consulting on an energy performance commitment, but small business needs high-quality advice on energy reduction. That is why the Chancellor announced that the regional development agencies are increasing their expenditure on environmental and energy efficiency initiatives from £140 million to £240 million over the next year. In addition, all firms, whether or not they are in taxable profit, will have access to an enhanced capital allowance for more than 14,000 energy-saving and water-efficient products.
	Households constitute 34 per cent. of electricity emissions and changes in building regulations have raised energy efficiency standards by 40 per cent. since 1997, which is worth more than 1.5 million tonnes of carbon every year by 2010. We have reformed the planning rules for wind turbines so that they are no more difficult to install than a satellite dish, and we are committed to help all householders take advantage of cost-effective energy efficiency measures. We also believe that individuals should be able to export electricity more easily to the grid, which is why Ofgem is conducting a special study of how we can better reward people for taking the step of becoming an electricity producer, not just a consumer.

Peter Luff: Has the Secretary of State given any consideration to the Trade and Industry Select Committee report and its proposal not to levy council tax increases on households that choose to carry out the sort of actions that he is now praising?

David Miliband: Under the energy efficiency commitment, council tax—or reductions in it—are already being used as incentives for such energy efficiency commitments and I certainly intend to work with my right hon. Friend the Secretary of State for Trade and Industry, whom I see by my side on the Government Front Bench, to ensure that an appropriate response is made to the Select Committee's work.
	We also know that the fight against global warming needs new technologies such as carbon capture and storage. The principle is simple: instead of carbon dioxide from fossil fuels being released into the atmosphere, it is captured at source and stored safely underground. The results are transformational, with about 85 to 90 per cent. of carbon emissions removed from coal-fired power stations. The requirement is now urgent, which is why we are determined to have a demonstration plant in the UK, why a competition is now being launched by the Secretary of State for Trade and Industry, and why we want to show the world, especially developing countries, that this is not a technology to fear, but one to embrace.
	The third main area of transport represents around a quarter of carbon dioxide emissions. The pre-Budget report made commitments in respect of aviation that will save the equivalent of 750,000 tonnes of carbon a year by 2010-11, but surface transport—mainly from cars, vans and lorries—is 93 per cent. of the total.

Nick Hurd: On aviation, will the Secretary of State confirm that he argued to the Chancellor of the Exchequer that VAT should be introduced on domestic flights and, if so, why does he think he lost the argument?

David Miliband: I am glad that the hon. Gentleman raised that issue. One of the joys of the real world of government, rather than the dream world of opposition, is that collective discussion sorts out the best proposals from the not-so-good proposals. That is why— [Interruption.] If Opposition Members will contain themselves, that is why I was delighted that the Chancellor embraced the air passenger duty proposal, which was in the same letter about which the hon. Gentleman is so excited.

Brooks Newmark: Will the Secretary of State therefore confirm that he will follow the example of the Leader of the House and join the Chancellor's campaign team?

David Miliband: I have not yet been asked to join the campaign team, but I assure the hon. Gentleman, who will be concerned about the issue, that, as I have said for three years, the Chancellor of the Exchequer is an outstanding Prime Minister in waiting, and I believe that he will do outstanding service for the country—[Hon. Members: "As Chancellor or Prime Minister?] As Prime Minister—for some reason, there are some suspicious minds in the House. I am happy to assure Opposition Members that the Chancellor of the Exchequer will be sitting on this side of the House as Prime Minister for a long time to come.
	Surface transport accounts for 93 per cent. of the total, mainly from cars and lorries. It is right that we give incentives to all individuals to choose fuel-efficient ways of motoring. Were every car owner to purchase the most efficient vehicle in their current class of car, average CO2 emissions across the UK fleet would fall by 30 per cent. The commitments on fuel duty, over the three years, make that choice more likely. We predict that they will save 160,000 tonnes of carbon a year by 2016. Fuel-efficient cars in band B have CO2 emissions of about half those in band G. We now have a graduated vehicle excise duty system, so that cars in band G will next year face a tax rate of more than 10 times the level for band B.

Ben Wallace: While it is perfectly laudable to try to reduce inappropriate use of vehicles, such as 4x4s, perhaps in the city, does the Secretary of State recognise that the measure is rather unfair to those of my constituents who are farm labourers, shepherds and uplands farmers, who must use 4x4s for their job? Checking the sheep at 4 am in a Nissan Micra is totally inappropriate. Does he recognise that the proposal is too blunt an instrument?

David Miliband: I am sure that the hon. Gentleman is as delighted as I am that there is a lower poverty rate in rural areas than in urban areas, and that poverty is falling faster in rural areas than in urban areas.

James Paice: Will the Secretary of State address the issue raised by my hon. Friend the Member for Lancaster and Wyre (Mr. Wallace)? The issue is not poverty in rural areas, although we know from the Government's own advisers that 20 per cent. of rural people live in poverty. The reality is that many thousands of people require powerful engines for their work—towing trailers, four-wheel-drive pick-ups and so on. Of course we need to stop the use of 4x4s—although the issue goes beyond 4x4s—in wholly unnecessary circumstances. But does he accept that it is necessary to devise a new class for those who genuinely need a powerful engine as part of their work, and who might fall foul of the regulations? Will he discuss that with the Chancellor?

David Miliband: The hon. Gentleman speaks on these matters with expertise and commitment, and I take his point seriously. Obviously, we think that the principle of a graduated VED system makes sense. Different people have to make different choices for all sorts of reasons. This is not about forcing Nissan Micras down the throats of farmers, as was suggested earlier. However, if we are to have a graduated system that does not become impossibly complex to administer—for example, many people in rural areas might have a larger car but will not drive it only in that area—there will always be a balance to be struck with simplicity. I am sure that he would not want an over-bureaucratic scheme. If he wants to write to me or the Chancellor, however, or if the hon. Member for Lancaster and Wyre wants to make a specific proposal, we will consider it seriously. We try to strike a balance between the environmental, economic and social parts of the equation. A simpler system is always an advantage.

Brooks Newmark: Does the Secretary of State accept that VED is still a tax on ownership and not usage? Surely we should have a strategy under which the polluter pays. That should drive our strategy.

David Miliband: The hon. Gentleman makes a good case for the measures across the board that the Chancellor announced last week. I look forward to him persuading his own Front Benchers to set out their position on fuel duty, which has not been clarified.
	We also need to explore the scope for a large-scale shift away from fossil fuel-based transportation. For reasons of environmental and economic security, it is right that we look to a future in which we no longer use petrol to get around.

Kelvin Hopkins: On that important point, is my right hon. Friend aware that road freight pushes out 12 times as much carbon dioxide as the equivalent rail freight? It would be a tremendous advantage if we could get more freight on to rail. In that respect, will he support the scheme that I proposed, in an Adjournment debate, to build a railway line from Glasgow to the channel tunnel? The railway line would be dedicated to rail freight, link all the industrial areas of Britain and take 5 million lorries off the roads every year.

David Miliband: I believe that there has been a 35 per cent. increase in passenger numbers on the railways and an almost equivalent increase in freight numbers—I am happy to write to my hon. Friend with the details. Tempting as it is for me to do the job of the Secretary of State for Transport, the fairest thing that I can say is that I will look at his scheme. No doubt, my right hon. Friend will also consider it.
	Countries such as Brazil decided, about 25 years ago, to shift away from fossil fuel-based surface transport methods. The Chancellor has asked Professor Julia King to work with Sir Nicholas Stern to look into the benefits of taking carbon out of surface transport over the next 25 years by using electric or hydrogen-powered cars. My right hon. Friend the Transport Secretary will shortly announce the terms of reference of that work.
	My final point on domestic emissions is that the methane that comes from landfill is 23 times as powerful a greenhouse gas as CO2. That is why we have had the landfill tax for the past 11 years, which has helped to achieve a 25 per cent. reduction in the amount of waste that is sent to landfill. However, with the rate of increase at £3 per tonne, the incentives are not yet right for a fundamental shift away from landfill, which is why the tax will rise by £8 per tonne every year from April 2008 until at least 2010-11. That should save greenhouse gas emissions of at least 200,000 tonnes of CO2 equivalent per year.  [Interruption.] An hon. Member says from a sedentary position, "No, it won't", but I am happy to provide details to show how the landfill tax, which was introduced by a Conservative Government, has worked. I suggest that Conservative Back Benchers take a few lessons from their Front Benchers.

Greg Hands: Will the Minister give way?

David Miliband: I am answering this point. The money is recycled, so hon. Members can rest assured on that.

Joan Walley: Will the Minister give way?

David Miliband: Two people want to hop in. I will give way to the hon. Member for Hammersmith and Fulham (Mr. Hands) first.

Greg Hands: I am glad that that the Secretary of State mentioned landfill tax. What funding will be available to help local authorities to meet their obligations under landfill tax in the coming years?

David Miliband: I am afraid that the hon. Gentleman will have to wait for the comprehensive spending review for details of funding for the years from 2008. He will know that the position until then has been set out in previous Budgets and spending reviews.

Joan Walley: I rose to help my right hon. Friend out because it seemed as though we would not get any response from the Opposition. The Staffordshire Environmental Fund is keen that there should be an increase in the landfill tax because of the good work that is being done to aid recycling and environmental schemes as a result of the tax. That is a very welcome outcome of the Budget.

David Miliband: My hon. Friend, who sits on the Select Committee on Environmental Audit, is right. I thought that the landfill tax had cross-party support, so I am surprised by the earlier sedentary comment. We will have to put certain Conservative Back Benchers down as sceptics, if not opponents, but I assure them that the scheme is very good.
	I read in the newspapers that some people believe that it was a landmark decision to move away from landfill. Many companies pursue a zero landfill waste policy, which is a good thing.

Peter Ainsworth: The Secretary of State has been very generous in giving way. Just for the record, the landfill tax was introduced by the Conservative Government. We support it and we support what the Government are trying to do with it, but does he recognise that one of its consequences is increased fly-tipping, responsibility for which should fall within his Department? What initiatives is he taking to ensure that an increase in the landfill tax does not lead to an increase in fly-tipping?

David Miliband: The hon. Gentleman may not have memory on his side, but Labour Members recall his opposition on Second Reading to the Clean Neighbourhoods and Environment Act 2005, a measure that was designed to tackle precisely that problem. I suggest that he does not tie himself in any further knots.

Christopher Huhne: I welcome the increase in landfill tax because of the likely consequence of a reduction in methane emissions, but can the Secretary of State give us an estimate of the overall impact on greenhouse gas emissions of the measures announced in the Budget? How large a cut will they lead to, in percentage terms?

David Miliband: I do not have the figure to hand, but the hon. Gentleman can tally up the millions of tonnes of carbon represented by the announcements that I have made in my speech, and I shall be happy to send the figure to him later.

David Howarth: rose—

David Miliband: Perhaps the hon. Gentleman has been tallying up, but let us make this the last intervention.

David Howarth: I am sorry to disappoint the Secretary of State, but one difficulty with "tallying up" the environmental effect of the Budget is the precise result that the Government intend with their alterations to the climate change levy. The Red Book appears to give no figure for carbon saving from the package. Are the measures in the Budget designed merely to hold the savings level, or are they intended to make any change? If they are not intended to cause a reduction, why not?

David Miliband: The climate change levy has been raised by inflation, and the associated climate change agreements work with it. I understand the hon. Gentleman's difficulty with calculation in respect of some of the changes. Obviously there is an arithmetical relationship between tax and output, but my experience of talking to businesses suggests to me that the climate change levy and the associated agreements are causing them to take a whole new attitude to the way in which they deal with energy. In other words, the climate change levy—which, as I shall make clear later, has saved about 16 million tonnes of carbon so far—has had a bigger effect than an arithmetical calculation might suggest. To put it more simply, it has resulted in a cultural as well as a fiscal change.
	I want to say something about the international part of the agenda. We know that, as well as helping to build a low-carbon economy at home, we must contribute to further emissions reductions abroad. Our commitment to European action is central to our vision of the low-carbon economy of the future.
	The European Union can regulate across markets worth 475 million citizens, minimising the competitive disadvantage for any one country. It can bring together a negotiating bloc that is powerful on the world stage. It can create and use carbon markets to drive emissions reductions in Europe—markets that are worth billions of pounds in carbon finance for the developing world.
	We are determined that London will be the centre of the European and global carbon market. Thanks to the resolution of the dispute with the European Parliament, we can release common agricultural policy funds to our farmers to help environmental stewardship and rural development across our country. I will make further announcements about that later today.

Angus Robertson: In raising the European Union, the Secretary of State acknowledges that many decisions on these issues are now made in the Council of Ministers, but this is, in United Kingdom terms, a devolved matter. Can he tell us how many of those Council of Ministers meetings he has attended in the presence of a Scottish Executive Minister?

David Miliband: The short answer to that question is no, but I shall be happy to find out.

Greg Hands: Does that mean "no", or does it mean "none"?

David Miliband: I have been to many meetings of the Council of Ministers. I do not know whether the hon. Gentleman is deliberately misleading the House, or deliberately misunderstanding what I said, but I shall be happy to find out how many such meetings I have attended.
	I can remember Scottish Ministers being present at meetings. I sit on the council of environment Ministers as well as the council of agriculture Ministers. What I can tell the hon. Member for Moray (Angus Robertson)—and I am sure that it will interest him—is that the clout of all parts of the United Kingdom is all the greater for a United Kingdom presence at the negotiating table, rather than a splintering of our efforts.  [Interruption.] I said that I would find the exact number. I do not want to name a number of meetings that Scottish Ministers have attended, and then for that to turn out to be wrong. I want to reply to the hon. Gentleman later to ensure that he has an accurate answer.

Mr. Deputy Speaker: Order. I hope the Secretary of State will not allow himself to be put off by sedentary comments which are not helping the debate from either quarter.

David Miliband: Thank you, Mr. Deputy Speaker.
	We know that we need to effect change further afield. Carbon finance—the product of emissions reduction commitments in richer countries—will help, but we also need Government leadership. It was announced in the Budget that there will be an £800 million international window for the environmental transformation fund to help developing countries deal with climate change, get access to clean energy and tackle unsustainable deforestation. The poorest countries will be the most vulnerable to the effects of climate change, and we have a duty to support them and to help them to participate in the global transition to a low-carbon economy. Deforestation accounts for about 18 per cent. of global greenhouse gas emissions.
	That is why it is right that the first £50 million of the fund will go to support proposals made by 10 central African countries to help protect the Congo basin's forests and people. I am not sure whether the significance of that announcement has been appreciated. The forests of central Africa contain an amount of carbon equivalent to about 4 years of global emissions. If that carbon is released, all our futures will be affected. If it is safeguarded in those rainforests, we will all be protected.

Adam Afriyie: It strikes me that the European Union might introduce measures along the lines of the emissions trading scheme, which placed tax burdens on British citizens. Will the Secretary of State give a commitment that, if that is the case, the taxes that he has created—in respect of air passenger duty, for example—will be reduced to offset the taxes from the EU?

David Miliband: That would be a very disappointing commitment for the following reason. The European emissions trading system has had support from all parts of the House, as well as from business and industry. The recently published UK manifesto for the future of the European emissions trading scheme got part of its strength from the fact that business, non-governmental organisations and all parties in this House supported it. The market mechanism that has been established ensures that those who are environmentally thrifty are rewarded, and that those who are not have to pay. That seems to me to be a very good principle to establish.

James Paice: The Secretary of State is right in what he says about deforestation, and we all want to prevent that from happening, of course. However, that raises an issue to do with the renewable transport fuel obligation. As he knows, there is widespread concern that if we are not careful we will meet that obligation simply by sucking in ethanol from Brazil and palm oil from Indonesia, with both of them taken either directly from land that was rainforest or by domino effect. When does he expect the Government will announce their criteria for meeting our targets in this regard, using sustainability objectives and others that will prevent those imports?

David Miliband: The hon. Gentleman raises an important point, but we are consulting now on how we can make this work. He might be thinking about the European side of this matter. As a result of our interventions, and those of others, the European commitment on biofuels requires steps to be taken in a sustainable way.
	At the G8 meeting in June and the UN convention in December, the UK will be able to argue for a global emissions reduction deal on the back of landmark proposed domestic legislation in the draft Climate Change Bill, significant domestic action and world-leading commitment to international help. The hon. Member for East Surrey (Mr. Ainsworth) said last month, at a joint forum at which the Government and the Liberal Democrats were also represented, that the foundation of his approach—the lodestar of his policy and the reason why he could be trusted in the battle against climate change—was that he believed in conservation. However, we will never achieve a low-carbon economy by becoming a preservation society. The old ways are the problem; they are not the solution to climate change. What our carbon-fuelled economy needs is not conservation but change.
	The hon. Gentleman says—and I believe him when he does so—that he has no time for climate change deniers, but I therefore have to ask him to have a word with the hon. Member for Woodspring (Dr. Fox), who speaks for his party on defence and who says, astonishingly, that
	"there's evidence on both sides, I don't think anyone actually knows what the real causes are".
	We know from the scientists that they are 90 per cent. certain of both the nature of climate change and its causes. I hope that the hon. Member for East Surrey will be able to reassure us that the real position of the Conservative party is not to be found lurking in the words of the shadow Defence Secretary.
	The Budget represents clear choices not for conservation, but for radical change. If we were to rely on social responsibility and not on Government action, we would not have every house builder working towards constructing zero-carbon homes. If we did not have the climate change levy, we would not have already saved more than 16 million tonnes of carbon and be on course to save 3.5 million tonnes of carbon a year by 2010. If we were isolated in Europe, we would not have been able to win support for tough vehicle emissions standards. If we were to follow the new fiscal rule of the Opposition, we would not have £800 million to spend on development projects, which they say they support.
	The Chancellor said two weeks ago that carbon reduction now sits alongside low inflationary growth and high employment as the third foundation of economic policy. The Stern report has given Governments their marching orders: to align a market price for carbon and procure sustainable products, alongside international regulatory standards for low carbon goods, and information for citizens to help them support the goal of emission reduction. Stern said that carbon tonnes, not just sterling pounds, are the metric of policy. That is the course that the Government are following, and I commend it to the House.

Peter Ainsworth: I feel rather sorry for the Secretary of State, not just because of the lamentable turnout on the Government Benches for this very important debate on a key issue of our times, but because of the Budget itself. He has tried to put a brave face on it, but he knows that it was a hopelessly unambitious Budget for the environment and for rural Britain. It was spun as a green Budget, but yet again it was just plain Brown. It is not the Secretary of State's fault: he was a given a job to do by the Prime Minister, and he has found it quite difficult. If what we read in  The Observer this weekend is true, the Prime Minister is keen to give him another job; and we hear today that even Peter Mandelson is keen for him to have another job.
	Before even contemplating taking on another job, however, the Secretary of State needs to be a little more careful about the way in which he expresses himself. Writing in the very same edition of  The Observer yesterday, he said:
	"New Labour has, in my view...not been good enough at promoting strong community self-government...not good enough at making them"—
	teachers, nurses and the police—
	"feel like real entrepreneurs...not good enough at giving young people a sense of commitment to the country...not good enough at reducing domestic carbon emissions...not good enough at promoting real engagement with citizens."
	Indeed. Many Opposition Members look forward to the Secretary of State promoting himself, and to a Labour manifesto that reinforces the points that he put so eloquently in  The Observer yesterday.
	The Secretary of State was originally given the job by the Prime Minister in order to tackle the environment. In a letter sent at that time, the Prime Minister asked him to
	"take action on climate change"
	by
	"ensuring that national consensus for action is turned into concrete measures that will have a real impact."
	Unfortunately, somebody else has got in the way, and we know who.
	In October, the Environment Secretary wrote a letter to the Chancellor, entitled "DEFRA's Priorities for Budget 2007". In it, the right hon. Gentleman urged the Chancellor to "seize the policy initiative" on the environment, which is quite interesting in its own right, because it implies that the policy initiative has slipped from the Government's grasp. It has: it is on the Opposition Benches.
	I have often asked and urged the Government to show some initiative on climate change and the environment, and I have made it clear that we will support them if they provide leadership in the drive towards a low carbon economy. However, after years of watching them fiddle about and fail, I am running out of patience, and they are running out of time. They have left behind a trail of missed targets on the environment, and they are going to miss the most important target of all. It must be the most important of all, because it has appeared in three successive Labour party election manifestos: the 20 per cent. cut in carbon emissions by 2010.
	The Government are not even meeting their own internal green targets. Not a single Department attained full marks in the recent Sustainable Development Commission report on Government performance, and 15 Departments' emissions have gone up. The Department for Environment, Food and Rural Affairs itself came a rather middling ninth, getting three out of five points. The Government's own watchdog said:
	"Against a background of non-stop messaging on climate change and corporate social responsibility, the Government has failed to get its own house in order."
	The Budget will not put that situation right, and the Secretary of State knows it.
	In his letter to the Chancellor, the Secretary of State asked him to look into aviation, car tax, greener homes and incentivising clean technology. We might have expected that his pleas would fall on deaf ears. After all, the former Cabinet Secretary, Sir Andrew Turnbull, told us last Tuesday about the
	"more or less complete contempt with which"
	the Chancellor holds other colleagues. He singled out the Environment Secretary. According to Sir Andrew, the Chancellor's attitude is:
	"If you want something done about the environment, you don't talk to David Miliband."
	It is all too clear that the Chancellor did not talk to the Environment Secretary before putting together the so-called green part of the Budget.
	Let us use the Environment Secretary's yardstick to see how the Budget measures up. In his letter to the Chancellor, the Environment Secretary warned that
	"emissions from aviation are our fastest growing source of greenhouse gas",
	that
	"air travel is lightly taxed",
	and
	"I do not believe that we can leave aviation untouched".
	We agree. He also said:
	"There is a case to look again at making flights subject to VAT",
	In fact he went further; he said that VAT should be on domestic flights, as in some other European countries or, better still, on all EU flights.
	On Wednesday, the Chancellor told the House that he had
	"had representations to put VAT on airline tickets".
	Indeed he had—from the Environment Secretary who, presumably, felt suitably chastened when the Chancellor went out of his way to say that
	"the substance of the measure has not been properly thought through".—[ Official Report, 21 March 2007; Vol. 458, c. 823.]
	Could it be that the Chancellor has executed an aerial U-turn, because when we made just that point, the Environment Secretary accused us, absurdly, of wanting to "criminalise" aviation? If taxing something means criminalising it, the Chancellor is responsible for the biggest crime wave of the century. The Environment Secretary's views about aviation appear to be a little confused.

Martin Horwood: The hon. Gentleman is having great fun at the Government's expense, but at least we know what their proposals are for aviation, and we know what the Liberal Democrats' proposals are. What exactly are the Conservative party's policies for aviation?

Peter Ainsworth: As the hon. Gentleman should know if he has been following politics, which is probably sensible for someone in his position, we have published some policy proposals on aviation, and we are consulting on them. Unlike Government consultations, we will listen to what people say and propose policies as a result. I am delighted to have had an intervention from the Liberal Democrats because it enables me to say how much we look forward to working with them. We believe that we can do business with them onthe environment and that many Liberal Democrat supporters would do well to support the Conservatives on the environment because we share many of their values.
	I did a little homework at the weekend and got out my paint set. The paper I am holding up is not a trick; it is genuine. I discovered that yellow and blue make green, but that if red is added it becomes brown. That is absolutely true and I did not mess about with the painting at all, Mr. Deputy Speaker, but I shall put it away quickly because I can see that I am catching your eye in an unhelpful way.
	The Environment Secretary's views about aviation appear to be somewhat confused, but so are the views of the whole Government. We know that the Chancellor does not listen to the Environment Secretary, but he does not seem to listen his own Treasury team either. The Financial Secretary—I am delighted to see him in the Chamber this afternoon—told the Environmental Audit Committee a year ago that
	"air passenger duty is not an environmental tax; it is not related to a concern about emissions, it is not related to more efficient aircraft, it is not related at all to more efficient use of the aircraft which are flying."
	That is absolutely right, but the next thing we know is that the Chancellor is doubling air passenger duty to save the planet. However, unlike our proposals, he is using green taxes not as replacement taxes, offset by tax cuts elsewhere, but as a stealth tax. I cannot think of a better way to alienate public support for measures to tackle climate change than to dress up stealth taxes as green taxes. He really does not get the tax offset idea, does he?
	We are in favour of increasing green taxes and offsetting them with tax cuts elsewhere. The Chancellor is in favour of announcing headline-grabbing tax cuts and offsetting them with an overall increase in the burden of taxation that hits the least well-off hardest. That is not a tax cut; it is a tax con. What does the Environment Secretary think about green taxes, or has the Chancellor not had time to tell him yet?
	Let us return to the right hon. Gentleman's other proposals. In his letter to the Chancellor, the Environment Secretary asked for a "substantial increase" in vehicle excise duty. In Wednesday's response to that letter, the Chancellor cut the bottom rate by £15—heady stuff—and increased the top rate by £200. Does the Chancellor seriously think that someone thinking of paying £75,000 for a Porsche Cayenne will have second thoughts because of a £200 hike in vehicle excise duty? This is a classic example of ineffectual tinkering. We need to be far more ambitious and radical. It is high time that the Government backed a commitment to getting car emissions down to 100g per kilometre, with a clear package of incentives and regulations to ensure that the goal is met.

David Miliband: I had a long time to make my speech and to answer questions. A number of those questions—three, possibly four—protested at the increase in vehicle excise duty from £200 to £300 to £400. The hon. Gentleman has just said that that increase is far too puny and that it should be much greater. Will he explain what his position actually is?

Peter Ainsworth: The concerns that were expressed were in relation to the impact on people in remote rural areas who need to use heavy-duty cars to go about their business. There is a genuine problem there, and the Government have admitted as much.
	In his letter to the Chancellor, the Secretary of State then moved on to homes. He asked the Chancellor to look into stamp duty rebates for new zero-carbon development. In Wednesday's response to the letter, the Chancellor did indeed promise no stamp duty for new zero-carbon homes, but with this Chancellor nothing is straightforward. He sneakily put a five-year time limit on the stamp duty exemption. How many zero-carbon homes does the Secretary of State honestly think will be built by 2012—the deadline for the exemption? Will he explain why a Minister killed off the Local Planning Authorities (Energy and Energy Efficiency) Bill, which was promoted by the hon. Member for Gower (Mr. Caton) and which had all-party support? It would have allowed local authorities to set tougher environmental standards for new homes. It is extraordinary: the Government wreck a Bill by one of their own Labour colleagues that could have made a real difference and instead offer a hollow headline about stamp duty relief on houses that do not exist.
	In the final part of his letter to the Chancellor, the Secretary of State asked him to look into removing barriers to innovation. In Wednesday's response to that letter, the Chancellor attempted to support microgeneration. First, he promised an income tax exemption for domestically produced energy sold back to the grid. That looks like a good move—until one reads the small print. The move is not exactly life-changing. Experts say that it would be worth, at most, £22 a year to householders who go through the hassle of installing renewable energy in their homes—big deal.
	It gets worse. Income tax is not currently collected on microgenerated energy anyway, so we have something completely new here. It is not a stealth tax; it is a ghost tax. The scheme does nothing to make it easier for home owners to sell their energy. The Chancellor made no effort to push for a higher grid price for microgenerated energy or for smart meters to allow everyone to buy and export energy more easily. The Chancellor claims that he has asked Ofgem to look into the matter. We are so bored with his asking people to look into it. We have seen endless consultations and dither, timidity where we need boldness, and half-hearted and piecemeal meddling where we need consistency and leadership.
	Friends of the Earth called the promise of an extra £6 million for the low-carbon buildings programme "a joke". The trouble is that tackling climate change is not funny. The low-carbon buildings programme was originally supposed to run for six years. Then we were told it would run for three. Then in December we were told that a monthly cap would be placed on grants to try to draw the scheme out. Then last week we were told that the scheme was being temporarily suspended. Is it not utterly typical that the Department of Trade and Industry released a stealth announcement on Budget day that suspended the low-carbon buildings programme for at least two months? This has been a total shambles. Where consumers and suppliers have looked for certainty, they have found chaos. In March, the grants ran out in 75 minutes. What the Government have created is a monthly bun fight that is constricting demand. People who are unable to get grants wait until next month, the following month or the month after that to order their chosen technologies, or they simply give up.
	So, even on the Secretary of State's own tests, the Budget was a failure. He asked the Chancellor to look into aviation, car taxes, greener homes and cleaner technology. He wanted the Chancellor to be bold and imaginative and all he got was tinkering. No wonder the Secretary of State said recently—presumably in a fit of bitterness—
	"in six months or a year's time, people will be saying, 'wouldn't it be great to have that Blair back, because we can't stand that Gordon Brown'".
	The Budget also ignored many issues that the Environment Secretary has ignored too much of late. There was no mention of support for the natural environment, despite the perilous state of more than half our sites of special scientific interest. Despite the Chancellor's obvious lack of interest, will the Environment Secretary confirm that a marine Bill will be guaranteed in the 2007 Queen's Speech, whoever is Prime Minister at the time? There is no guarantee.
	There was no mention of support for our rural communities. The sole rural dimension was a 2p a litre increase in the tax rate on red diesel. Of course, as the House has heard, many farmers and people in remote rural areas will be caught by the increased tax on 4x4s —[ Interruption. ] I do not know why the Economic Secretary to the Treasury is looking so dumbstruck. I am merely reiterating what I said a few moments ago.
	On the same day as the Budget, the Lyons report recommended that farm buildings should be subject to business rates. That would represent a £300 million tax on farming. Can the Environment Secretary imagine the impact that that would have? Does he agree with that proposal? Does he agree with the recommendations in the Lyons report on rural farm buildings and business rates?

Hon. Members: Are you going to give way?

Mr. Deputy Speaker: Order. Let us get the procedures right here. If the hon. Member for East Surrey (Mr. Ainsworth) is tempting a Member to respond to him, he should immediately give way. Otherwise, he has the floor.

Peter Ainsworth: rose—

Edward Balls: rose—

Peter Ainsworth: If the Economic Secretary is going to answer my question about the Lyons report, I will happily give way.

Edward Balls: I am still digesting the hon. Gentleman's earlier comments. Does he think that the tax on 4x4s is too high, about right, or too low?

Peter Ainsworth: The hon. Gentleman has not exactly answered the question. The ominous silence on the question of the impact of the Lyons report on farming will echo around the countryside. I have already discussed vehicle excise duty. It creates a problem for people who have to use such vehicles for their work in remote rural areas—it is as simple as that.
	Having read the Lyons report, it is clear why the Government decided to publish it on Budget day: it was a good day to bury bad news. In sum, the 2007 Budget was full of headline-grabbing half measures and wholesale omissions. The Chancellor may have commissioned the Stern review, but it is clear that he has not taken its findings to heart. He just does not get it. It is because there are still people in British politics who do not get it, such as the Chancellor, that the forthcoming Climate Change Bill should provide for annual rate-of-charge targets to be set and audited by an independent body. The Government need a better annual yardstick than a leaked letter from the Environment Secretary. We need a climate change policy that is based on science, not spin.
	I understand that some of the Environment Secretary's friends have nicknamed him Brains, after a character in "Thunderbirds". I probably do not need to remind you, Mr. Deputy Speaker, that Brains was a slightly weird, geeky character. However, above all, he was a plastic puppet jerking around on the end of a piece of string. We all know who the puppet master is; the strings are held in a clunking fist belonging to the man who assumes that he will soon be the next Prime Minister. People are sick of spin, stealth taxes, tax cons and puppet Secretaries of State whose ambitions, when they exist at all, are ignored and ridiculed by the Chancellor. We need a step change in our approach to the environment. We need a sense of urgency and a message of hope, opportunity and determination. This Budget proves beyond doubt that the last thing that anyone who cares about our fragile environment needs is the change at the top that is being engineered by the Labour party. We need a complete change of direction and a change of Government.

Michael Meacher: rose—

Hon. Members: Change of Government!

Michael Meacher: I agree with the percipient and prescient comment of the hon. Member for East Surrey (Mr. Ainsworth). I assure him that, under me, the Labour party and a Labour Government would have a very different environmental approach and a genuinely green policy.
	I am tempted to go down the route of discussing the Government's environmental policy after the forceful speech of my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs, but I will not, because I prefer to confine my comments on that subject to the Second Reading of the Climate Change Bill, which, I take it, will be held shortly. I therefore want to talk about a rather different issue, but first I shall make just one comment on the subject.
	As my right hon. Friend said, the Government's record on greenhouse gas emissions is good, at least compared with those of others, but he made a statement at the start of his speech that I had not heard before. If I heard him correctly, he said that, taking account of the EU emissions trading system, UK greenhouse gas emissions had gone down by 11 per cent. since 1997. I think that he said that.

David Miliband: I am happy to repeat the figures for the benefit of my right hon. Friend, who is a distinguished former Minister for the Environment. On 1990 levels—the figures are for 1990 to 2005—greenhouse gas emissions are down 19 per cent. It is actually 18.8 per cent., I think. For CO2, the figure for 1990 to 2005 is 11 per cent. Since 1997, if we include the EU ETS, greenhouse gas emissions are down 11 per cent. For CO2, if we include the EU ETS, the reduction is 4 per cent.

Michael Meacher: That is what I thought my right hon. Friend said, and he has repeated something that I have not heard before, namely that if one includes the EU emissions trading system, since 1997, UK greenhouse gas emissions are down by 11 per cent. What my right hon. Friend did not say, but which needs to be said, is that the EU emissions trading system is very poorly crafted. The baselines are far too lax, the allowances are far too generous, and the net deductions are, in reality, very much smaller than is claimed. If that somewhat deceptive scheme, which needs to be sharpened up hugely, is excluded, as I think it should be, I fear that our greenhouse gas emissions have hardly gone down at all since 1997. I am not saying that they have not gone down, but they have gone down by a very small amount. My real point is that they have gone down by much less than the 2 to 3 per cent. a year that is needed if we are to achieve the target of a 60 per cent. reduction by 2050.

Christopher Huhne: I am as surprised as the right hon. Gentleman is that the Secretary of State appears to have invented an entirely new statistical series that is not included in the environmental accounts published by the Office for National Statistics. Those accounts show that there has been an increase in CO2 emissions since 1997. At the very least, the Secretary of State ought to place those figures in the Library.

Michael Meacher: That would be useful, and in light of this debate, I am sure that my right hon. Friend the Secretary of State will consider doing that. I take heart from the fact that my right hon. Friend agrees that the UK has to do much better, and not just marginally better. It has to act on a scale that I do not think many people, including Ministers, have got their heads around. The changes across the spectrum of Government policy will have to be considerable. Having made that point, I want to speak about a different issue.
	One of the central objectives of a Budget should be social justice, and on this occasion, I think that on balance politics prevailed over social justice considerations. As many have said, the combination of the 2p income tax cut and the elimination of the 10p tax band will, of course, transfer income from lower earners to middle earners. The alignment of income tax and national insurance, so that there are two tax bands and two thresholds, may simplify the tax system, but only at the expense of undermining its progressiveness. The 2p cut in corporation tax reduces company taxation to its lowest ebb in 60 years, inevitably switching the burden towards more regressive personal taxes.
	The continuing failure to end the scandal of hugely lucrative tax loopholes for the very rich, such as non-domiciled tax status and the short-term taper relief for private equity investors, simply enhances the trend towards inequality, which is far too embedded in the system. All of that may well have shot several Tory foxes—it was probably very successful in doing so—but it does not promote social justice to any significant degree.

Adam Afriyie: The right hon. Gentleman's sentiments about social inequality are shared by the Opposition, but does he share my overwhelming concern and alarm that while there was a 2p cut in corporation tax for large businesses, which is to be welcomed if one believes in competition in the tax arena, taxation on smaller businesses was increased by about 16 per cent. in a three-year time frame? Those smaller businesses may be owner-managed, and they may support one or two other members of the family, so it will hit them very badly.

Michael Meacher: I cannot validate the hon. Gentleman's figures. All that I would say is that the level of corporate taxation overall is too low. Of course, I understand the competitiveness point, but the level of corporate taxes has reached such a low level that it will inevitably lead to a big increase in every other arena of taxation, so there are likely to be regressive taxes on individuals. However, I agree that within the corporate sector taxes on small businesses should be reduced as far as is reasonable and fair, even at the expense of large companies, which are extremely profitable compared with similar businesses abroad, so they could certainly pay more.

Christopher Huhne: rose—

Michael Meacher: I think this is the last time that I shall give way to the hon. Gentleman.

Christopher Huhne: It is kind of the right hon. Gentleman to give way to me a second time. Is he as shocked as I was to discover the calculations over the weekend, which showed that someone needs to earn £18,650 a year before they will receive an income tax cut in the Budget? What the Chancellor has done—and it is the first time ever that a progressive Government have done so—is to take from the bottom end of income distribution to give to the middle. Is the right hon. Gentleman as shocked as I am by that?

Michael Meacher: I have already referred to that point, and I am not going to add anything further.
	Britain is now one of the most unequal countries in the world. The latest official figures show that the rich have made a killing in the past decade, and that inequality rose sharply between 1997 and 2002. It is perfectly true that it has fallen back since then, but it still remains, at least on the latest figures, above its level in 1997. That reflects the fact that although child tax credit, working tax credit and pensioner benefits, all of which I strongly support, have provided a modest but welcome lift for the poor, the rich have done hugely better. That is the problem. It is not that the poor are poorer; they are not—they are slightly better off—but the rich are hugely better off.

Brooks Newmark: Will the right hon. Gentleman give way?

Michael Meacher: Yes, so long as it is not about private equity.

Brooks Newmark: I promise it is not about private equity. I strongly support what the right hon. Gentleman said about social justice, but does he share the concern of the Opposition and myself that the tax credit system itself is a fiasco, with only three in five people receiving the right amount of money?

Michael Meacher: We all know that there have been considerable problems with tax credits. We are perfectly well aware of that—and I know that the Government are striving to overcome those problems—but the principle of tax credits for working families is a very good one. One of the problems is that not every one who is entitled to a tax credit necessarily claims or receives it. The principle is a good one, but I am worried that through the tax system, the Government are effectively supporting employers who pay their lowest-paid employees too little. That is the fundamental cause of the problem.
	The top 1 per cent., whom I would call the super-rich, have done a great deal better. Their share of national income fell from 13 per cent. in 1937 to just over 4 per cent. in 1974, but in the Thatcher-Major years it rose rapidly back to almost 11 per cent. in 1997. I submit to the House that we are now returning to the inequality of the 1930s, if not of the Edwardian era. Their share of national wealth has ballooned even more. It shot up from 17 per cent. in 1990 to 23 per cent. in 2002, so fewer than half a million adults—the group that I am talking about—controls nearly a quarter of the entire wealth of the nation, while half the population, over 20 million individuals, have seen their share fall to just 6 per cent. in 2002. I would call that a case of gushing up, rather than trickling down.
	I shall give one further example before I turn to what needs to be done. The mega-rich, perhaps the top 0.1 per cent.—one in a thousand—have done best of all. I have been looking at the statistics. Some 75,000 individuals now own almost half the liquid assets in Britain and they are, on average, 66 per cent. richer than they were five years ago. Those at the very top, the richest 1,000 in Britain, have seen their wealth triple from £99 billion to £301 billion since 1997. In the past year alone, the overall wealth of this group soared by 21 per cent. or by more than £50 billion, and the number of billionaires has tripled from 14 to 54. That, I submit, is a degree of inequality that has nothing to do with competitiveness or fair differentials. It simply reflects the capacity to satisfy greed on a very big scale.

Greg Hands: The right hon. Gentleman is making a powerful case, but with reference to liquid wealth, does he agree that one of the important reforms that we could have introduced over the past 10 years but which has not happened is to increase share ownership, which has been incredibly static among individuals over the past 10 years?

Michael Meacher: I am certainly not opposed to that. The previous Prime Minister of the hon. Gentleman's party, Lady Thatcher, made a very considerable effort in the 1980s to achieve an extension of share ownership. To a degree, she did, but it stuck at around 9 to 12 per cent. If anything, the concentration of share ownership among the most wealthy has continued since then.

Adam Afriyie: rose—

Michael Meacher: I would like to make progress, if I may.
	All this matters for three reasons. First, the corollary to this extreme maldistribution in income and wealth is the persistence of poverty and inequality. It is worth noting—I say this for illustrative rather than practical purposes—that if all the gains made by the top 1 per cent. since 1997 were transferred to the poor, poverty would be abolished overnight. I do not expect that to happen, but it illustrates the point that I am trying to make.
	Secondly, such excessive widening of inequality cannot conceivably be justified. Like everyone in the House, I believe in merit, fair rewards and incentives, but this is on a completely different scale. It in no way reflects improvement in business performance. Indeed, we read every week in the paper about rewarding failure, which has become commonplace. Rather, it is self-enrichment on a mega scale.
	In 1980 a chief executive of a top company might have earned some 25 times more than the average worker. Today, it is 120 times. Last year the average pay of the FTSE 100 chief executives, including bonuses, share options and so-called fringe benefits, was £2.8 million. I have done a quick sum. That works out at £46,155 a week, which is 550 times more than the state pension and 230 times greater than the minimum wage.
	There is a third reason—for me, it is the most profound—why such drastic inequality matters. There is now abundant international data showing that the greater the inequality between the richest and the poorest, the higher the levels of ill health, crime and social breakdown across society. The price of extraordinary material success for a tiny number is social failure and dysfunction within society, which is not a bit surprising. Increased social hierarchy and increasing social inequality significantly raise the stakes on personal worth, and for those who lose out, the feelings of inferiority, resentment and inability to compete inevitably generate antisocial reactions towards the society that demeans them.
	There are lessons here for the Government. Some years ago, Peter Mandelson charmingly told us in a remark that I have never forgotten that
	"New Labour is relaxed about people getting filthy rich".
	The Chancellor's ideological commitment to unfettered market forces, neo-liberalism and globalisation has certainly let inequality rip. At the same time—I wish to be entirely fair—the Government have commendably tried very hard to limit social dysfunction by relentless targeting to deal with inefficiency, misdemeanours, crime, poor performance and inadequate effort. I praise all that, although I sometimes think it a bit excessive. However, it is not perceived that those policies are incompatible, because the pursuit of inequality persistently undermines the Government's real efforts to improve health and educational outcomes, to cut crime, to improve social mobility, to build sustainable communities and, obviously, to reduce poverty.
	There are some other lessons for the Government. The Chancellor's predilection for giving the market its head to work in its normal way as an engine for generating huge and growing inequalities and for then, very commendably, trying to correct some of the worst excesses at the margin by improving benefits and allowances of some of the neediest groups in the Budget will not work. That strategy is not adequate.
	Inequality is now a structural issue—it is a systemic issue, and not simply a matter for tactical adjustment at the periphery from time to time. The problem is that the basic incomes of the poorest are far too low, while the incomes of the rich are largely self-attributed, are not independently assessed and are often unrelated to merit or effort. Furthermore, every trick in the accountant's book is used in order to eliminate, avoid or evade tax.
	I do not want to duck the question of what needs to be done. The state pension, which is now worth no more than one sixth of average earnings, is far too low, and it should be raised to the pension credit level as of right for all, not least in order to avoid means-testing as many as three quarters of pensioners by 2050, which is the current trend. The net cost of that measure would be about £7 billion, although if it were confined to the over-85s, which I would understand, it would be less than £3 billion. That is certainly affordable, when the current surplus in the national insurance fund is around £40 million.

Kelvin Hopkins: I strongly support my right hon. Friend's remarks, especially about pensions. Does he agree that a more ambitious target for the state pension would be 25 per cent. of average earnings, which was the level in 1980 before Mrs. Thatcher broke the link with earnings? Just getting back to where we were 25 years ago might be a good target.

Michael Meacher: I like my hon. Friend's ambition, but I am, as ever, modest. If we could achieve what I have set out, which would result in an increase from £84 a week to £119 a week, I would call it a considerable achievement. However, I agree that that would be only a first step.

Rob Marris: I suggest to my right hon. Friend that it would not be a good idea to raid the national insurance fund, which is to pay for unemployment benefits, the NHS and disability benefits for those injured at work. A much better source of funding would be tax relief on pension contributions, which amounts to about £18 billion a year and which is extremely regressive—half of the relief goes to the top 25 per cent. of earners, and some 10 per cent. goes to the top 2.5 per cent. I cannot recall the exact figures, but that relief is incredibly regressive, and it consists of £18 billion in forgone tax revenue.

Michael Meacher: I entirely agree. I am only embarrassed that I did not come up with the idea first, because my hon. Friend is exactly right. We have an extraordinary system that involves a very low state pension and enormous reliefs on pension funding, which are largely limited to those at the top. A simple redistributive transfer makes obvious sense. I shall take on my hon. Friend's idea and will credit him when I repeat it in future.
	Instead of employers being allowed to close down good occupational and final salary schemes, they should be required over time to pay back the £18 billion that they have taken out in past pension holidays. That is affordable, when many companies continue to pay dividends each year which exceed their pension scheme deficits. I shall give one example from the Lane, Clark and Peacock survey: in 2005, Vodafone paid out a dividend of £2.7 billion, which was significantly more than its accounting deficit of £136 million, and 24 companies declared dividends in excess of twice the amount of their pension scheme deficit. Why do the Government not require companies to meet pension fund deficits before dividends on that scale are permitted?
	The national minimum wage is too low at £5.35 an hour, which is certainly not a wage that anyone in this House would want to live on. It should be increased straight away to £6 an hour, and soon after that it should be increased again to at least £7 an hour—incidentally, that would be without any risk of higher unemployment from internationally traded goods and services. As for top incomes, which may be of more interest to hon. Members, they need to be justified and not simply appropriated. We should require companies—at least the larger ones—to call a meeting once a year of representatives of all the main grades in the company from the highest to the lowest to open the books, to examine what is left for increasing wages and salaries after all the costs have been met and to allow people to justify their claims, if they can, to all those present. Transparency would not prevent fair or even large differentials, which I am certainly not opposed to if they are justified, but it would make the naked greed of some much harder to carry off at the expense of everyone else.
	It is time that the grotesque excesses of greed and inequality—I am glad to hear that this view is shared on both sides of the House, and I hope that the Government share it, too—which now disfigure our society are brought under control. The Prime Minister has regularly defended the super-rich with two arguments: that wealth creation is much more important than wealth distribution; and that wealth at the top harms nobody else. I am afraid that he is wrong on both counts. If Labour—or new Labour—is genuinely for the many not the few, a major reduction in inequality must now be a priority for the rest of this Parliament.

Christopher Huhne: The Secretary of State was a little harsh with the hon. Member for East Surrey (Mr. Ainsworth), because any policy that is advocated by a Tory Front Bencher and loathed by quite so many of his own Back Benchers cannot be all bad.
	I am happy to say that there is a good deal to welcome in this Budget's environmental measures. I should particularly congratulate the Chancellor and the Secretary of State on the Congo basin initiative. Tackling deforestation will be a key part of a global attack on climate change, because, as we know from the Stern review, it is responsible for 18 per cent. of carbon emissions. It is essential that we develop a policy that works not only in the Congo basin, but in Brazil, Indonesia, Borneo and Papua New Guinea.
	I also welcome the competition to develop a full-scale demonstration of carbon capture and storage, which is a vital interim technology. The rise of the climate change levy in line with inflation is overdue, as are the rises in the landfill tax and the aggregates levy. Zero carbon homes are to have no stamp duty levied on them, so let us just hope that house builders are encouraged to build some and that it will prove to be a reassuringly expensive concession.
	The Budget's key importance is that it is the prime statement about the economy in the parliamentary year. The climate change debate is an economic one: it is about how we change our economy and how we undergo a new industrial revolution. There is a big difference between the new industrial revolution that we shall require over the next four decades and those that have occurred, all of which were driven overwhelmingly by the desire to satisfy new consumer needs, whether we are talking about moving from gas light to electric light or from the steam engine to the internal combustion engine. There are advantages in tackling climate change, but this will be the first major technological change that will have to be driven both globally and by policy.
	The Government's record is, unfortunately, disappointing. I look forward to the figures that the Secretary of State has promised us. The published figures in the "Environmental Accounts" show that emissions have increased since 1997, even given the enormous advantage of the electricity generating sector's movement from coal to gas.
	I turn to the spending side of the Budget, where flood defences cuts this year look exceptionally short-sighted, as do biodiversity research cuts at the centres for ecology and hydrology, such as the centre at Wool in Dorset, which have done so much important work in understanding how our natural system—our flora and fauna—will adjust to climate change. Even more ridiculously, there have been cuts in expenditure on the Hadley centre, which is probably the world's leading research centre on climate change.
	On the broader environmental front, I noted that the Secretary of State was proud of the Government's record on recycling. I should merely add that we started at an extraordinarily low base and that the latest environmental comparisons within the European Union show that our recycling rate remains the third lowest of all member states.
	I am also extremely worried that after I intervened earlier the Secretary of State was entirely unable to tell the House what the environmental or climate change impact of the Budget would be. The Red Book devotes a whole chapter to the environment and hardly a week goes by when the Chancellor and his Treasury team do not tell us that it is essential that there should be environmental impact assessments and assessments of compliance costs, yet the Secretary of State is unable to tell us what the impact of these measures will be. I look forward to hearing his reply, because the research that we have conducted appears to show that they will have the combined effect of reducing the amount of carbon emissions by about 330,000 tonnes—or 0.15 per cent. of the UK's total. That makes the point that this is far from the planned route march towards a decarbonised economy that is essential if we are to grasp our opportunity.
	Transport has largely been ignored on the tax side, yet its emissions are key. The Environmental Audit Committee's recent report told us that such emissions have increased by 18 per cent., yet the Chancellor, as we all know, was spooked by the fuel duty protests in 2000 and since then, green taxation as a share of gross domestic product—the only sensible measurement of the tax burden—has fallen from 3.6 per cent of GDP in 1999 to 2.9 per cent. on the latest figures.
	Is that a good measure of effort? It is a summary measure. The idea that if green taxes work they may vanish is simply wrong, because a continued high tax and high price on bad activities may be necessary to sustain a continued change in demand. Many Chancellors have discovered that sin taxes pay, and this Chancellor would have an exceptionally large hole in his Budget if he were not able to rely on the ongoing revenue from tobacco and alcohol.
	The specifics of this Budget on the environment, and on taxation in particular, are not good. The Liberal Democrats are unequivocal that the vehicle excise duty changes do not go far enough; we know exactly what the likely impact of the increase to £400 will be, because the Energy Saving Trust commissioned a MORI opinion poll that examined the likely impact on purchases. It found that 33 per cent. of car purchasers were likely to change their view as a result of that increase in vehicle excise duty.

David Miliband: The hon. Gentleman has used the Energy Saving Trust's figure that there will be an impact on 33 per cent. of people. Will he confirm that he is citing a poll from 2003 and that the differential in the bands was £50? There was not the £300 to £400 versus £35 differential that will exist.

Christopher Huhne: I can confirm that the poll was from 2003, but it is the latest poll that has been conducted. The Secretary of State is misinformed if he believes that the use of the £50 per band is inappropriate, because the £400 applies to band G—the highest band—and if one were to add up the £50 for each step, funnily enough one would reach that sort of figure. I am sorry that his arithmetic is as challenged as it appears. I rest my case: if we were to adopt the £2,000 figure that the Liberal Democrats have proposed, we would change the purchasing decisions of 72 per cent. of the population, rather than 33 per cent.
	Moreover, the element of retrospection that would be avoided were the duty to be imposed only on newly purchased vehicles would make it a substantially more saleable proposition, not least in rural areas. As those who have been concerned about that issue know, a number of working 4x4 vehicles do not fall into the top category. Liberal Democrats believe that it is important that we have measures that support rural communities in their proper business.
	On the aviation proposals, we have seen that the increase from £5 to £10 merely gets the Chancellor back to where he first started. There is nothing in these proposals to base our national aviation tax on the emissions of the flight, which is the only sensible way to proceed, because doing so would ensure that where a flight takes off half full the amount of tax that is paid is not halved. There would be an incentive to fill up the flight and the airline would have an incentive to move more rapidly towards having low emissions aircraft.
	Green taxes can be popular providing that—this deals with the worst charge against the Chancellor—there is a clear guarantee to hand the money back. We know from opinion poll evidence from Populus that 71 per cent. of the British population will back green taxes if they are not regarded as a stealth tax and if the revenue is handed back. However, 62 per cent. of the population do not believe that that is what the Chancellor is doing—unfortunately, they believe that he is merely raising revenue in another stealth tax.

Rob Marris: My understanding is that the hon. Gentleman's party's proposal—certainly last year, although it may of course have changed by now—is to raise about £18 billion through green taxes. He likened green taxes to sin taxes, in that they would become a permanent part of the Government's revenue-raising measures and so would not be designed to change behaviour, but now he talks about giving things back. There is a contradiction in his position.

Christopher Huhne: The hon. Gentleman is a highly intelligent Member of the House and knows very well that changing behaviour on an ongoing basis often requires ongoing changes in price. Green taxes will change people's behaviour. For example, in the case of vehicle excise duty, 72 per cent. of the population will change the car purchases that they make, but that will leave 28 per cent. continuing to buy gas guzzlers and paying substantially more as a result.
	The Environment Secretary seems to "get" a lot of this agenda, judging by his interesting Budget submission to the Chancellor. I will not intrude on his embarrassment, since the hon. Member for East Surrey has already quoted it in extenso; nor will I quote from Lord Turnbull's remarks to the effect that if you want something done about the environment you do not talk to David Miliband.

Madam Deputy Speaker: Order. I remind the hon. Gentleman that the correct parliamentary terms should be used when referring to Members of this House.

Christopher Huhne: Thank you, Madam Deputy Speaker; I stand corrected.
	It is regrettable that the Secretary of State talks a good deal more sense about these matters than the Chancellor. It is also regrettable that he has not yet decided to throw his hat into the ring for the leadership— [I nterruption. ] Speaking from experience, I recommend it. He has the perfect qualification for running for the leadership, and indeed the premiership, which is that the Chancellor does not listen to a word he says.
	The Budget contains something to be recommended, but there is no fundamental strategy for the long route march to decarbonise the UK economy and the world economy. That means that it is ultimately an unsatisfactory and disappointing Budget. The reason why the strategy is not there is simple—the Chancellor does not "get" the green agenda. He does not understand the environmental agenda or the nature and all-encompassing threat that climate change poses to our society and to our economy—if he did, he would be far more radical.

Andrew Selous: On a point of order, Madam Deputy Speaker. I seek your guidance. On the Order Paper, there is listed for publication today a written ministerial statement from the Department for Communities and Local Government. It is a very important statement about local government reorganisation. I have just come from the Library, where, at 2 minutes past 6, that statement was not present. I was further informed by Library staff that they had been told by the Department that it might not even be forthcoming at any point today. Can you advise me and the House, Madam Deputy Speaker, whether it is in order for a Department to put down on the Order Paper a written statement and then not produce it at all on the day in question?

Madam Deputy Speaker: Clearly, the hon. Gentleman's remarks will have been noted by the Department in question, and I hope that it will do its very best to get the statement into the Library.

Emily Thornberry: A decade ago, the major political issues were interest rates, unemployment and economic chaos. People wanted us to fix it and to get a grip, and we have. We have changed the country—fundamentally and for the better—but in doing so we have changed what people want from their Government. I can tell the House that what people in Islington want has changed. I want to talk about some of the new priorities in my constituency—climate change, affordable housing, child poverty, and treatment of the marginalised. Although my constituents' priorities have changed, what has not changed is their belief that the problems that we face can be tackled only by radical, collective action.
	Only the most ridiculously partisan observers would deny that one of the greatest achievements of this Labour Government over the past 10 years has been economic growth and stability. Looking back to the time before 1997, it is difficult to believe that before we introduced spending reviews with their three-year rolling programmes, Government Departments knew only from year to year what funding they were going to get. They lurched around between lean and fat years. They were dependent on boom and bust, and on whether their Department was fashionable or their Minister was in favour with the Prime Minister. It must have been a nightmare to plan anything. We have changed all that and allowed for the planning of good and stable government. Because of Labour, the British Government are well placed to take a stable and strategic view of what they are going to do domestically to tackle the biggest challenge of our generation—climate change—and able to take a lead in the world.
	The draft Climate Change Bill will introduce radical change in the way that Governments work. It is based on the principles in the Climate Change Bill that I was proud to sponsor and promote. When introduced, the Bill will be the first example of its kind. It will have legally binding targets for carbon emissions. It anticipates the first carbon budget period being between 2008 and 2012, which is roughly concurrent with the comprehensive spending review and its parallel public spending agreements. The Government now have an opportunity to tie together their investment and activity with our obligations to cut emissions under Kyoto and our own self-imposed obligations under the draft Bill.
	However, we need to be brave and bold and to get on with it. I hope that this will mean that even greater improvements are made to public transport infrastructure in London and that Londoners will be able to look forward to increased investment in that infrastructure, with projects such as Crossrail and the continuing refurbishment of tube lines and stations, including the hugely welcome rebirth of St. Pancras. We will get the joining up of the East London line with Highbury and Islington and the breathing of new life into the tragically neglected North London line. We will get hybrid buses introduced across London—first, I hope, on to Islington's badly polluted streets. We will get continuing investment in the network of cycle paths and facilities that are so encouraging cyclists in London. I speak as chair of the all-party group on cycling. All that will allow the powerhouse of the British economy—London—to cut its carbon emissions while allowing our economy to continue to grow.
	While on the subject of climate change and the support given to environmental policies by the Budget, let me take this opportunity to welcome the increase in vehicle excise duty on the most polluting vehicles—up from £210 last year to £300 this year and £400 in 2008-09. When I was a member of the Environmental Audit Committee, we called for the top band—band G— to be "significantly raised", and I am pleased that in the two years since our report was published the tax on gas guzzlers will have doubled. Let me put it another way. By 2009, the cost of road tax for the biggest and most excessive Chelsea tractor—a Range Rover with a 4.4 litre Jaguar-sourced V8 engine—will be more than 10 times that of a Toyota Prius, and so it should be. The hon. Member for East Surrey (Mr. Ainsworth) seemed to commit the Conservative party to a much higher band G for 4x4s in cities. I agree. I hope that the Government listen and go further. However, I should say to the hon. Gentleman that the hon. Member for Hammersmith and Fulham (Mr. Hands), who was sitting behind him, did not look the slightest bit happy about the Conservatives seeming to make that commitment.

Brooks Newmark: The hon. Lady has talked about how much tax will be raised and how much more is raised by one vehicle versus another, but she has not addressed the real issue—taxing in order to change behaviour. What does the Chancellor's Budget contain in that regard?

Emily Thornberry: I agree that the purpose of green taxes should always be to change behaviour and I believe that we should do it progressively so that, if behaviour changes and, for example, people buy a smaller car, they do not need to pay so much tax. In that way, we can change behaviour and say to people, "Go this way and we will help you." However, that is not the Liberal Democrats' approach, which is to set green taxes simply to raise revenue. It is interesting that their documents do not mention the amount of carbon emissions that will be saved by their green taxes.
	The changes in vehicle excise duty, combined with the planned increases in fuel duty in the next three years, show the direction of Government policy. That is the sort of large, brightly lit—solar powered, of course—road sign that shows the Government's direction and where we expect to go together. Those of us who are alarmed by global warming should stand and applaud the Government for their lead. However, while encouraging them, we should also urge them to go further.
	Our homes produce one third of the UK's carbon emissions and we cannot rely on enlightened self-interest to solve the problem by erecting a windmill here and changing a car there. We must work collectively and we need a Government who will step in to bring people together. I welcome the way in which the Budget does that.

David Taylor: The Environment, Food and Rural Affairs Committee, of which I am a member, visited Freiburg in south-west Germany, near the Black forest, only a few weeks ago to ascertain the reason for its reputation for leading local authorities in Germany on renewable energy and energy efficiency. My hon. Friend mentioned her local authority at the start of her speech. Does she believe that local authorities such as Islington, which is probably a similar size to Freiburg, as well as the Government, should take a lead, and revert to the principles of Agenda 21? They were laid down many years ago and some local authorities appear to have abandoned them.

Emily Thornberry: Yes. A Liberal Democrat Member launched my local authority's new policies on the environment. From what I understand of the new policy, it appears to subsidise putting windmills on top of houses and other such high-profile matters. Such attention-grabbing behaviour does not, in the end, save the planet. There is no point in putting a windmill on top of a house if it is not insulated and the boiler has not been changed. One does not save the planet through the equivalent of buying a different sort of car. One has to do much more—and be much more fundamental—than that. I am greatly saddened by my local authority's attitude to its so-called green initiatives because I believe that they constitute a certain frippery.

Christopher Huhne: I am sorry that the hon. Lady has not taken the opportunity of welcoming her local council's initiative, which is the first of its kind in the country to get the private sector in a borough to commit to greenhouse gas reductions. That is a worthwhile initiative and she runs the risk of appearing a little sour if she does not welcome it.

Emily Thornberry: Many private industries are interested in cutting their emissions and work with local government and national Government to do that. I assure the hon. Gentleman that Islington council did not think of that first.
	It is important to cut the carbon emissions of our homes, and we have already done that. We started with Labour priorities through the decent homes programme, which, to many council tenants means new kitchens and bathrooms, but is much more than that. It is about ensuring that our social and affordable housing is up to decent homes standards. That means making sure that they are properly and fully insulated and energy-efficient. We have begun with social housing, so that those who are most vulnerable and in most need are literally insulated against the cold. When we came to power in 1997, only one in four homes in Islington were at decent homes standard, but by 2010, every single one will have reached that standard, thanks to a Labour Government. That is progressive politics in action and an achievement of which we should be immensely proud.
	I also welcome the initiatives in the Budget to take the next step in our comprehensive action of ensuring that owner occupiers and private rented homes are brought up to the mark. The energy-efficient commitment will continue to force energy suppliers to improve energy efficiency in the homes that they serve. The Warm Front programme gives low income households grants of up to £4,000 to improve their energy efficiency. Pensioners who do not have central heating can receive a £300 discount when installing a new system. To tackle the biggest market failure of all—in the private rented sector—the Budget extends and expands the landlords energy savings allowance, which gives an allowance of up to £1,500 to landlords who invest in cavity wall and loft insulation. However, we could and should do more, although we are going in the right direction.
	I also greatly welcome the kick start that the Budget gives to the Government's goal to make all new builds zero carbon by 2016. The Budget has changed the stamp duty rules so that no stamp duty will be payable on the first sale of zero carbon homes of up to £500,000. Homes costing more than that will get a reduction of £15,000. I have a special interest in that aspect of financial incentives because, when I was a member of the Environmental Audit Committee, we made recommendations in our sustainable homes report of 21 March 2006.

Graham Stuart: Will the hon. Lady give way?

Emily Thornberry: Of course I shall give way to another member of the Environmental Audit Committee. I am sure that he can tell us more about the sustainable homes report.

Graham Stuart: How many homes does the hon. Lady believe will benefit in the next year or two from the change that the Budget announced?

Emily Thornberry: The answer is many but not enough—we can always do more. Our ambition is clear and we are moving in the right direction. No British Government have previously introduced financial incentives to ensure that people insulate their homes. We are introducing those green incentives, in accordance with the recommendations of the Committee on which the hon. Gentleman served with me.
	The Committee recommended that the Treasury consider reducing stamp duty for green homes. Exactly a year after the publication of the report, the 2007 Budget delivered the recommendation. Various groups that put pressure on the Environmental Audit Committee and gave evidence at its meetings should be acknowledged. They include WWF and its "One Million Sustainable Homes Campaign", the Association for the Conservation of Energy, and the Energy Savings Trust. They have been working hard on the issue for many years and I hope that they will continue to work with us to ensure that we move forward.
	The Government now need to build on their progress and develop a comprehensive set of fiscal incentives linked to the code for sustainable homes. The Budget will ensure that no home is left behind and that, by the end of the next decade, all existing and new homes will have the highest standard of energy efficiency. As we proved with social housing, that will not happen as result of market forces alone. We can achieve our goal only by stepping in as a Government commitment to working together. We cannot simply leave matters to the market. When Labour Members talk about housing, we know that it is a priority for our houses to be green, but that we also desperately need more of them and that they must be affordable.
	We need more affordable housing for people such as Ms A, who came to my surgery recently asking for help. She is married with four children. She lives in a two-bedroom flat and has been on the waiting list for a transfer for several years. Her parents have died and she took on responsibility for her teenage sister, so there are seven people in a two-bedroom flat. Ms A's oldest child is eight and autistic. Her second child is five, has severe language delay and may also be autistic. Her third child is three, has language and learning delay and behavioural problems. Her fourth child has asthma.
	Ms A lives in fear that her three-year-old, who was rolling on the table moaning while Ms A was trying to talk to me at my surgery, may fall out of the window as she has no idea of danger, cannot communicate and climbs a lot. Ms A has back pain and cannot sleep at night because the eight-year-old and the three-year-old keep her awake. She is worried about her orphaned sister, who has to share her bedroom with her two nieces and has nowhere to study. Ms A suffers from depression—and no wonder. She urgently needs a four-bedroom home.
	Islington council runs what is laughably called a choice-based lettings system, which means no choice and precious few lettings. One needs a certain number of points to have a chance of getting rehoused. Getting the points depends on how desperate one is compared with everyone else, who is also desperate. Ms A has 202 points and she needs about 350 to stand a chance of getting the sort of accommodation that she needs.

Greg Hands: Will the hon. Lady give way?

Emily Thornberry: No, I will not.
	What chance do Ms A and her children have? What chance does her sister have? This case is not an isolated one. I hear stories like it every day, which break my heart. They are just one of 13,000 families languishing on the council waiting list in Islington. Many Labour Members, particularly those who represent inner-London constituencies, will recognise this story. There are many Ms As who need bold and radical action from our Labour Government.
	There is a chronic housing problem in many areas and there are many thousands of people on waiting lists. Unfortunately, the problem in my constituency is exacerbated by the actions of the Liberal Democrat council. My council has for the last six years presided over planning controls that allow six out of every seven new homes to be luxury flats.

Martin Horwood: rose—

Emily Thornberry: It seems that the Liberal Democrat council cares more about investment bankers who want to live in luxury flats near the City than the needs of our own overcrowded families, who are in desperate need of rehousing in a decent manner. In the face of this terrible crisis, we were heartened to hear my hon. Friend the Economic Secretary, in a debate on the London economy in Westminster Hall on 20 March 2007, say:
	"Building more social housing must be a priority for the spending review."—[ Official Report, Westminster Hall, 20 March 2007; Vol. 458, c. 232WH.]
	The mobile phones of London Members started humming, expectations were raised and many of us sit and hold our breath—and we wait.

Greg Hands: rose—

Martin Horwood: rose—

Emily Thornberry: I want to move on to deal with child poverty, of which the lack of affordable housing, particularly in inner London, is a major cause. Indeed, 35 per cent. of children in inner London live in poverty, even before housing costs are taken into account, but once those costs are included, it jumps up to 52 per cent. There is no other part of the country where housing costs have such a huge effect on child poverty. As a result, my constituency, on some counts, has the 16th highest level of child poverty in the UK.
	This morning, I visited Winton primary school to discuss the marine Bill. I have been to 25 primary schools in my constituency to promote the importance of that Bill and they are all writing to the Secretary of State for the Environment, Food and Rural Affairs. At Winton school, 69 per cent. of the children get free school meals, 74 per cent. speak English as a second language and 93 per cent. do not come from a white British background.
	The Government's efforts to tackle child poverty have been unparalleled. Under the Tories, child poverty doubled, but now, because of sound economic management, more people are in work with their pay topped up by tax credits— [Interruption.] The hon. Member for Beverley and Holderness (Mr. Stuart) should listen, as there is very little understanding among Conservative Members of what tax credits are or how they work. Those of us who work in the inner cities, where there are high levels of child poverty, understand the importance of tax credits very well. As a result, 700,000 children have been lifted out of relative poverty, giving them a chance and giving them hope.
	Tax credits may not be as flash as putting a windmill on your house, but they have worked. A recent report by the independent Institute for Fiscal Studies found that the fall in child poverty has been the result of more parents being in work and fewer people in work being in poverty. The report said:
	"The government can take considerable credit for this: the reduction in the risk of poverty amongst these groups is due at least in part to new spending directed towards families, through tax credits. The reduction in the number of children in workless families is also due, at least in part, to government policies that have helped previously non-working parents (particularly lone parents) move into work."
	In Islington, South and Finsbury that means that, whereas unemployment was up at 5,319 when Labour came to power in 1997, it has now more than halved to 2,386.
	Here is an example of where our policies have helped one of my constituents. Ms B is a single parent who works about 20 hours a week as a nursery nurse. Her net wages—the Liberal Democrats should listen to this; I urge them to change their ideas on tax credits—are only £127 a week, which is about the same amount that she would get if she stayed at home on benefits. However, working tax credit, child tax credit and child benefit together contribute another £123 a week, bringing her total to £250 a week. Now that really is making work pay.

David Howarth: Does the hon. Lady recognise that the Chancellor's abolition of the 10p tax band will mean that her constituent's tax bill will rise?

Emily Thornberry: No, because the whole point is that tax credits will take people up to a certain limit and will guarantee a certain income. This woman, working the hours and getting the tax credits that she does, will receive a guaranteed income. That is the difference. That is why we are bringing in progressive taxation and benefits and helping women exactly like this. These are the sort of people who are our people, whom we are looking after— [Interruption.]—and I am proud to sit on the Government Back Benches when my Government do things like that. We had a progressive Budget that is doing the right thing for poor working families, for single parents like Ms B. They are now able to work because of the Budget and other Labour initiatives, which were done in spite of the Opposition. We need more single parents like Ms B to feel they can afford to do vital jobs like working in child care.
	The fall in unemployment over the last decade in Islington, South and Finsbury has made a real difference to— [Interruption.]

Madam Deputy Speaker: Order. There are far too many conversations going on in the Chamber.

Emily Thornberry: The fall in unemployment over the last decade in Islington, South and Finsbury has made a real difference to people's lives. If we are to cut child poverty further, we need to help more parents into work and ensure that it pays to be in work. Two fifths of children in the constituency get free school meals, which means that neither of their parents are in full-time work. Another measure of child poverty—based on children in families on benefits—makes my constituency the sixth poorest in the UK.
	The new measures in the Budget are therefore welcome, as they will directly help those families. They include significant increases in the threshold for full working tax credit and in the child element of the child tax credit, which will help incentives to work. Perhaps most welcome though is the— [Interruption.]

Graham Stuart: Will the hon. Lady give way?

Emily Thornberry: No. I am coming on to a very important point for poor families in London—and it is a change in Government policy for which we are very grateful. We are perhaps as grateful as we feel it was overdue. The change in policy is extra specific help for London's single parents returning to work. There will be an extra credit of £60 a week for the first year compared with £40 for parents in other parts of the UK. Some parents in London who do not go to work currently feel that they cannot afford it because of the high costs of housing and child care. We are really pleased that the Government have recognised that and increased the tax credits.
	Another of my constituents wrote to me today to say:
	"There should be help for people who want to work, even if I decide to stay off work to claim full benefit I will die of not working, I want more out of life."
	Women like that should be and are being helped by us. I am glad that the Budget recognises the higher costs that single parents face in London. On top of that, child benefit for the first child will rise to £20 a week by 2010, and we will continue our investment in education across the board from early years through primary to secondary schools. Taken together, it is estimated that those measures will take a further 200,000 children out of poverty—another important step towards our goal of ending child poverty by 2020.
	Along with children living in poverty, children with disabilities are one of the most vulnerable groups in society, so we must make sure that we support them. I am glad that the Government have already initiated a review covering the needs of disabled children. It is especially welcome that the Chancellor mentioned the review in his Budget speech as well as his commitment to consult widely on its findings in the run-up to the comprehensive spending review.
	I am glad to note that the review has already identified speech and language therapy as an area in which services may not be sufficiently responsive to need. The Michael Palin centre for stammering children, which is based in my constituency, is an NHS centre of excellence for treatment of children who stammer. It is helping thousands of children from across the country. The centre deals with a complicated and distressing disability. The effect of a stammer on children is more than just a health issue. It affects their educational opportunities, social confidence and many other areas of life. A child who stammers may find involvement in class more difficult or suffer bullying at school.
	Labour Members and the Government are very serious about tackling social exclusion, so we must make sure that children's lives are not blighted by being unable to communicate properly when it is possible, with the right intervention, to really help them. The Michael Palin centre is facing problems getting its services commissioned by some primary care trusts, but I am glad to say that Islington PCT's commissioning ensures that Islington's children get a first-class service from the Michael Palin centre. However, we need to make sure that all children across London and the rest of the UK can get the help they need from the centre as well. The patchiness of response from PCTs and strategic health authorities has been recognised in the review and I hope that the upcoming comprehensive spending review ensures that there is dedicated funding for children with communication difficulties and disabilities in general. We also need to make sure that the needs of that group are reflected in the next round of public service agreements.
	Let us contrast that with the Liberal Democrat and Tory priorities. Every time that tax credits are mentioned in Parliament, they attack them. We know the Tory approach: record pensioner poverty, record child poverty and record levels of unemployment. They will not spell out their policy positions because they know that they are unpopular. The Lib Dems, on the other hand, have never had to take responsibility for anything, so they have no track record. In their 36-page paper on tax policy, child poverty is not mentioned once. They should be ashamed. The Lib Dem tax plans hardly mention tax credits, which is not much of an assurance for those hard-working families who rely on them. They voted with the Tories against tax credits in 1999, and they have made no commitment to keeping them.
	Under the Budget, by October 2007, a couple or lone parent in full-time work with one child will have a guaranteed minimum income of £276 a week. The Tories and Lib Dems have shown no commitment to supporting Labour's guarantee to parents in work. I am proud that Labour is ready to guarantee a decent income to families. It is a pity that the Liberal Democrats and Tories will not join me.
	I have spoken about some of the top priorities of people in Islington. Compared with 10 years ago, people's priorities have changed, because the country has changed. The Labour Government have made the country better and more stable by putting progressive politics into action. The solutions, however, are based on a set of values that have not changed. The values that we have in 2007 are the same as those that we had in 1997, and the solutions are progressive, radical and collective. As we face the new problems and priorities of the future, it is as clear as ever that we can only tackle the problems that we share by working together for the common good.

Peter Luff: Members have heard a tale of two cities so far tonight; there certainly is a big difference between Oldham and Islington.
	Next month, I will have been a Member of the House for 15 years, as will my hon. Friend the Member for Cotswold (Mr. Clifton-Brown), who is sitting on the Front Bench. During that time, I have listened attentively to every Budget speech. Over the weekend, I have been wondering why I found last week's Budget speech so offensive. All the other Budget speeches, including the previous ones from the current Chancellor, have been political: after all, we are politicians, and one expects politics from politicians. Until this year, however, all those Budgets, even this Chancellor's, have concentrated on the needs of the real world. But this Budget was about two things only: trying to secure the Chancellor's position as the next Prime Minister; and trying to embarrass and discredit the opposition—although I am not sure whether he had in mind the Opposition on this side of the Chamber, or the opposition from within his own party to his prospective leadership.
	The right hon. Member for Oldham, West and Royton (Mr. Meacher) was right to speak about the Budget's lack of attention to social justice. I am afraid that the hon. Member for Islington, South and Finsbury (Emily Thornberry) has not understood what the Budget was all about. The failings of the Budget, however, have met their just reward: sometimes, there is justice. Because of the sheer nakedness of its purpose, the Budget has failed in both its intentions, and, regrettably, has further diminished the respect in which we are all held by the electorate.
	In short, it was a nasty, dishonest little Budget. The Chancellor finished with a great flourish, managing not to grimace as he went against the grain and promised us all a tax cut. But it did not take long to work out why he was not grimacing—he was not cutting taxes. In fact, he was putting them up. If my reading of the figures, all the expert comment and the Red Book are wrong, and the Chancellor really was offering tax cuts, I would welcome such a remarkable U-turn. The Chancellor has dismissed our policies for over a year, so were his offering genuine it would have been his masterstroke—his cherry-on-the-top moment—to embrace them.
	It has been said before—but not yet by me, so I will say it again—that the Budget was a tax con, not a tax cut. The British people, however, are cleverer than the Chancellor realises.

Martin Horwood: But does the hon. Gentleman agree that the Budget at least fooled the right hon. Member for Witney (Mr. Cameron), whose initial response was to accuse the Chancellor of a tax-cutting election gimmick?

Peter Luff: Until one gets round to reading the Red Book, it is easy to be taken in by the Chancellor. Only a close reading of the Red Book, as I will show in my speech, will reveal the true nature of the Budget. It is important to repeat the point that I implied earlier: the most breathtaking aspect of the Budget was the way in which the Chancellor appeared—I say "appeared" for reasons that I shall explain—to embrace Conservative party policy.
	As I was saying, the Chancellor's great mistake was to think that the British people would be taken in—but they will not be. After all the stealth taxes of the past 10 years, they are paying more, and getting less for it, and they know it. An attempt was made to present it as less pounds or bang, whatever the phrase is, for your buck— [Interruption.] I am glad to see that my colleague on the Trade and Industry Committee, the Member for Wolverhampton, South-West (Rob Marris), is in the Chamber and making sedentary interventions, but he knows what I meant. The Chancellor tried to present the Budget as fiscally neutral, and then offered us tax cuts. We know that the two things are contradictory, and the Chancellor is nothing if not a man of ruthless logic.
	Instead, however, the Chancellor invited us into the looking-glass world of Alice. You will remember the moment, Madam Deputy Speaker:
	"I can't believe that!" said Alice.
	"Can't you?" the Queen said in a pitying tone. "Try again: draw a long breath, and shut your eyes."
	Alice laughed. "There's no use trying," she said: "one can't believe impossible things."
	"I daresay you haven't had much practice," said the Queen. "When I was your age, I always did it for half-an-hour a day. Why, sometimes I've believed as many as six impossible things before breakfast."
	The happily named Red Queen did not persuade Alice, and the red Chancellor certainly has not persuaded the country. Well before breakfast on the day after the Budget, the British people knew exactly what was going on. Sadly, some right-wing commentators did not. One, writing in  The Daily Telegraph the following day, said that the Conservative economic policy now lay in smoking ruins after the Chancellor's tax cuts. Admittedly, he described the cuts as symbolic, recognising that they were not really tax cuts at all. He seemed to believe, however, that British people would be taken in. I have more faith in my fellow countrymen and women. The commentator wrote:
	"The message is simple; the Tories are now the party of high taxation, Labour is the party that gives you tax cuts."
	Just how wrong can a clever man be? The so-called tax cuts were all offset, to use the appropriate phrase, by tax increases elsewhere in the Budget—as they had to be to achieve neutrality, not of carbon but of tax rates.
	Let us consider, for example, the massive growth in the revenue from stamp duty shown in table C8 of the Red Book—a growth of £4 billion in two years. In London and the south-east, and now in many other parts of the country, that is a tax on hard-working families, not on the rich. There is no real danger of the Labour party being seen as tax cutters: the British people know a con trick when they see one. Incidentally, promising the illusory tax cut in a year's time did not help the Chancellor's cause much either.
	Although the British people are wearying of their growing tax burden, they want the real thing when it comes to tax cuts, not deception. They know that the Chancellor had already increased taxes by £2.5 billion since the last Budget, so it was never going to be a day of announcing bad news—he had £2.5 billion in the bank. Those tax increases, which would normally have been part of this Budget, were announced in the autumn statement, and included a massive increase in air passenger duty that is already being paid by hard-working people without the traditional legislative scrutiny or authority. That is really stealthy—a tax that was imposed in February and not mentioned in the Budget will get legislative authority only tomorrow night.
	Conservatives should not be worried about the Budget in relation to tax cuts; the real danger is that the Chancellor has adopted our fundamental economic policy, as my right hon. Friend the Leader of the Opposition made clear in his response to the Budget. The Chancellor has done that cautiously, but he has adopted it, and it is called sharing the proceeds of growth. The same right-wing commentator whom I mentioned described that policy as a "silly little catchphrase", but he is badly, dangerously wrong. It is not a catchphrase; it is a very good idea.
	Let me try to explain this simple concept to the clever people who seem to find it elusive. There are, in essence, only three things that a Chancellor can do. He can steadily increase the share of the national wealth that is taken by the state, he can keep it broadly stable, or he can reduce it. The Conservatives believe that he should reduce it. Then comes the choice about the rate at which to reduce it. The route that we have chosen would mean that some of the growth would be used to provide improved public services in real terms and some to reduce taxes. That is the prudent route. It is prudent politically because we know that the British people rightly value public services such as health, education, the police force and defence. It is an economically prudent route because it offers the best guarantee of economic stability and of increasing competitiveness. The Chancellor plans to increase public spending in each of the next three years by less than the growth rate of the economy as a whole, but he could have gone further. He has planned for a gap of only about 0.5 per cent. in his sums—increasing public expenditure by 2 to 2.5 per cent. a year while the economy grows by 2.5 to 3 per cent. However, it is a step in the right direction. He is sharing the proceeds of growth timidly, but he is doing it.

Kelvin Hopkins: Does the hon. Gentleman accept that his thesis that an economy with low taxes and low public expenditure is a strong economy is fatally flawed? Last year's Organisation for Economic Co-operation and Development figures show that Sweden spent 57.1 per cent. of its gross domestic product on public services, while Denmark spent 53.8 per cent., Finland spent 50.6 per cent. and the UK spent 45.4 per cent., so we are at the bottom of that league table. However, the highest growth figures are in the countries with the highest public spending figures, such as Sweden. We are also at the bottom of that list. Does he accept, therefore, that his argument is entirely wrong?

Peter Luff: No; by adopting in moderate and tentative form this fundamental part of Conservative policy, the Chancellor is likely to make the economy rather stronger than would otherwise have been the case—again, I deny the hon. Gentleman's point. That is the real danger of this Budget for my party, but it is good news for the country. Our economic competitiveness has been slowly declining under this Government, but the planned reduction in the share of national wealth, to be taken by the state, could begin modestly to correct that, although the Chancellor's borrowing plans in table C5 of the Red Book remain a cause for real concern.

David Howarth: I am following the hon. Gentleman's argument, but given that the state spends money mainly on benefits and salaries, there are only three ways in which to achieve what he and the Chancellor propose. They are to reduce benefits, to ensure that public sector pay stays behind the national average or to choose different Budget priorities. Is not that the case? Which of those three options does he advocate?

Peter Luff: My hon. Friend the Member for Beverley and Holderness (Mr. Stuart) just helpfully said, "Zero-sum economics", and I deny the hon. Gentleman's point on that ground as well. If expenditure on public services continues to increase in real terms, that choice is nowhere near as acute as he maintains.
	Other than in the early years, when the Chancellor stuck to Conservative spending plans, the Government steadily but surely eroded our competitiveness. In the past 10 years, our economic growth has been sustained for three reasons, and I hate to disappoint the hon. Member for Islington, South and Finsbury, but I disagreed profoundly with one of her remarks. The first reason is the golden economic inheritance, including significant supply side reforms, that the Chancellor had from the previous, Conservative Government. The second reason is the decision to give the Bank of England independence. The third reason is the decision not to join the euro. I salute the Chancellor for making the latter two decisions, which were positive, if one can call a decision not to join something positive. If I were Chancellor, and the Bank of England were not independent, I might have tried to use my influence to persuade it not to remove Elgar from the £20 note in the year of the 150th anniversary of his birth, but that is another matter.
	Sadly, all the Chancellor's other decisions have worked to undermine our competitiveness. In the uniquely benign world environment of the past 10 years, it would have been a scandal if the British economy had not flourished. Things have got better, but they should have been much better still. That is the real scandal. The Chancellor has nothing to boast about except for those two crucial decisions on the Bank of England and the euro. He was simply in the right place at the right time, and is a lucky Chancellor. Even the Government's supporters are beginning to realise that the clunking fist might have been clutching at straws. Derek Scott, the Prime Minister's former economic guru said:
	"When you an inherit an economy in good nick, as we did, it takes a long time to foul it up...We're clearly going the wrong way and I don't think Gordon's reputation is going to look nearly as good in 10 years time."
	I agree.
	Let us look at some of the specifics. On business taxation, I am happy to reassure the right hon. Member for Oldham, West and Royton that taxes on business will rise as a result of the Budget, not go down. There will be an extra £1 billion in 2008-09 and £1.8 billion in the following year, despite the apparent headline cut in corporation tax. I welcome the cut in corporate tax: the embodiment of the Conservative policy was that the corporate tax regime should be simplified and the simplification used to reduce the headline rate. That is a good idea. Bizarrely, however, the Chancellor then behaved exactly as the Red Queen would have him behave by not simply wishing to do two flatly contradictory things, but actually doing them. He simplified the main corporate tax system and used the simplification to cut the headline rate, but he also made the small business scheme more complex and used the complexity to increase the headline rate. Make sense of that if you can, Madam Deputy Speaker.
	The clunking fist has been clunking all over our nation's smaller businesses. The Chancellor is raising corporation tax by 3 per cent. for some companies, thus taking from them a further £820 million by 2009-10. Considering that the small business sector employs nearly 60 per cent. of the private sector work force and contributes half of the national GDP, the Chancellor should realise how angry people—not anonymous businesses, but real voting people—will feel about that. The British Chambers of Commerce surveyed its members and found that 71 per cent. of UK businesses believe that the rise will harm them. The BCC commented that, as the Chancellor
	"champions enterprise and acknowledges the importance of small business to the UK economy,"
	many of its
	"members feel let down and are dismayed by the measures taken which will hit their competitiveness and increase their tax burden."
	It adds, most worryingly, that it will especially harm those that are looking to grow their business. It is a pleasure to reassure the right hon. Member for Oldham, West and Royton again by saying that that comes on top of the massive £50 billion tax increases on British businesses since Labour came to power and the roughly similar cost of regulation that the Government have added to the cost of doing business.
	I am indebted to my constituent who gave me a copy of the excellent Shropshire, Hereford and Worcester edition of the Federation of Small Businesses newsletter, which I suspect is simply the national newsletter with a different wrapper. On eight pages headed, "Business information No. 134", Alan Roxborough enumerates the 57 varieties—literally— of Government actions that demand the attention of small business in this two-month period, some of which are very important, such as the first provisions of the Companies Act 2006 about the changes that they will have to make to their websites and letterheads. Others include the working restrictions on Bulgarian and Romanian nationals, the new rules for cutting waste crime, the implementation of the waste electrical and electronic equipment directive, the new money laundering regulations, access to good quality pensions and the penalties for incorrect tax returns. Another variety concerns streetworks permits, which are an important matter for small businesses when roads outside their front doors are dug up without any notice. I am sure that all those changes are worthy and necessary, but 57 in a two-month period? No wonder small businesses are hurting so much.
	Such a hostile attitude towards business is not unsurprising. A CBI poll suggested that 22 per cent. of British-based businesses have relocated one or more of their assets abroad, and that a further 17 per cent. are thinking of doing so. In the majority of cases, tax was the reason for that. There is another answer for the right hon. Gentleman. Indeed, 70 per cent. of the UK's business leaders believe that the UK's tax regime has got worse and more complex.

Brooks Newmark: Does my hon. Friend agree that the bigger issue is the complexity of the tax system itself?  Tolley's  Tax Guide has increased from just under 4,000 pages when the Chancellor came into office to more than 10,000 pages today?

Peter Luff: As it happens, my next remarks are on  Tolley's  Tax Guide, and I can give my hon. Friend the precise figures. He slightly overstates his case, but he does not ruin it in the process. In 1997,  Tolley's  Tax Guide had 4,555 pages. It currently has more than 9,000 pages and it is projected that it will increase to 10,200 pages as a result of this Budget. It has more than doubled. No wonder that the Engineering Employers Federation joins the Federation of Small Businesses, the CBI and the British Chambers of Commerce in arguing for simplification of the cumbersome tax system.
	The Chancellor has made much of having lowered corporate tax rates. It is true that he did that, but I am indebted to Liam Halligan, who wrote in yesterday's  Sunday Telegraph:
	"The cut in corporation tax is too little, too late. In 2003 Britain had the fourth lowest rate of corporation tax in the European Union. As new members have joined, and others have cut their rates, we now have the 19th lowest.
	And given recent announcements elsewhere, the forthcoming reduction means we will remain only in 19th place in 2008."
	That does not advance our competitive cause at all. It just means that we can barely manage to stand still. It is strangling our economy and affecting our competitiveness. According to the World Economic Forum, we have slipped from fourth to tenth in the international competitiveness league.

Brooks Newmark: I know that my hon. Friend has examined the case of the Republic of Ireland, which shows us that it is possible to create a more competitive tax economy—that is, a lower-tax economy—while collecting more tax revenues.

Peter Luff: I am grateful to my hon. Friend for making that point, although it is rather depressing to have to keep on making it. It is blindingly obvious, but it seems that some people simply will not listen to that crucial message.

Martin Horwood: Will the hon. Gentleman give way?

Peter Luff: I am going on for a bit longer than I intended, but I will give way.

Martin Horwood: Is the hon. Gentleman seriously suggesting that we follow the example of Ireland, which would require us more or less to halve our rate of corporate income tax?

Peter Luff: Over time, yes. It would generate more wealth for the country, and there would be more money to be spent on vital public services. The hon. Gentleman's intervention shows that, despite their best efforts, the Liberal Democrats still do not understand the way in which a modern economy works.
	Let me draw the attention of those seeking more details of our economic freedom to a survey carried out by the Heritage Foundation. I do so with some trepidation, as I know that mention of that organisation sends a certain shiver of apprehension up many people's spines, but it has done a very good and detailed job of work on economic competitiveness and similar issues. Among other things, the survey provides a vital measure of our economic freedom from Government, which shows that we are doing particularly badly. If anyone wants to know what "economic freedom" means, I will happily define it. I obtained a detailed definition from the website, which I commend to Members on both sides of the House: it is really interesting.
	We are worryingly behind our major competitors. We are the 31st least free of the 157 countries that the foundation examined. In other words, 126 countries are freer from the state in economic terms. We are just one place ahead of Lesotho, and one place behind Botswana. We lag far behind Canada, New Zealand, Australia, the United States, Singapore, China, India, Hong Kong, Japan and Ireland. Unsurprisingly, we score better than many European countries, but given their bureaucratic, interventionist approach, we should draw little comfort from that.
	The Chancellor talks about globalisation. I wonder whether he understands the real scale of the challenge we face. This "clunking fist" has a contradictory quality: it loves to tinker, too. Here we are again, back with the Red Queen. It is no surprise that industries as diverse as hotels, film production businesses, casinos and stairlift manufacturers are angry about changes tucked away in the details of last week's Budget.
	I had hoped to say something about the Lyons inquiry, but in view of the time I shall confine myself to asking—reinforcing the point that I made to the Secretary of State in an intervention—why people should take pride in the environment and invest in environmentally friendly things such as double glazing and solar panels if they are to be more highly taxed as a result. Council tax really must be more intelligent than that.
	I had also hoped to say rather more about some of the green taxation measures to be introduced by the Chancellor—I mean the Secretary of State. He may become Chancellor under the next Prime Minister, but I doubt it. However, I only have time to say something about vehicle excise duty. The Chancellor's VED proposals do not look as though they have gone through the rural proofing mechanism. I was interested by what was said about this by my hon. Friends the Members for Lancaster and Wyre (Mr. Wallace) and for South-East Cambridgeshire (Mr. Paice).
	The proposed tax on "Chelsea tractors"—the increase in VED—is actually a tax on the countryside. The rich drivers of the largest 4X4s can shrug off £400: it means nothing to them, and will not alter their behaviour. But what about the poor farmers? The forester in Scotland, the shepherd in Yorkshire, the arable farmer in Norfolk and the grower in Worcestershire need their 4X4s, and the increase will be a serious blow to them.
	The hon. Member for Islington, South and Finsbury (Emily Thornberry) rather misleadingly—but I must not say that; she rather unfortunately—compared Land Rover to Toyota in terms of environmental sustainability. I tried to persuade her to give way on that point. She obviously does not know that Land Rover, a very important British manufacturer, offsets carbon in both the construction and the use of its vehicles. There is no known way of recycling many elements of Toyota cars at present, and they are nowhere near as green as Land Rovers if the offsetting claim is true, as I believe it to be. The hon. Lady could have chosen a happier parallel.

Emily Thornberry: Will the hon. Gentleman give way?

Peter Luff: The hon. Lady would not give way to me, so I will not give way to her. Such blanket taxes are a further indication that the Government have forgotten rural communities.
	I would have liked to say something about carbon capture and storage. I think that the Government are moving in the right direction, but using the wrong mechanisms. I would also have liked to say something about science funding in the Budget, which I welcome, although I worry about the extent to which science is being translated into practical innovation and adding value to British business. I would have liked to say many other things, but I will conclude with just two more comments.
	The measures on spectrum mentioned in the Budget statement are a detail, but an interesting one. For a fleeting moment I woke up and heard the Chancellor use the word "spectrum", and refer to the sale of assets. The House will know that Ofcom is currently planning to auction spectrum as the nation moves towards digital switchover. As I have argued many times—for instance, in an Adjournment debate in the House—the planned auction could have serious adverse consequences for many users of the spectrum: churches, theatres, concert halls, sporting stadiums, news reporters and a host of others.
	I wanted to know the extent to which that sale of spectrum was being driven by financial considerations, so I tabled a parliamentary question asking the Chancellor what estimate he had made of the likely income to his department from the sale of spectrum resulting from the digital dividend. The answer was:
	"HM Treasury has made no estimate of the likely income from the sale of spectrum."— [Official Report, 8 March 2007; Vol. 457, c.2225W.]
	The Budget statement, however, included a figure indicating a massive increase in income from the sale of public assets, which incorporated the sale of spectrum.
	I have looked at the Red Book, and, to be fair, I must add that the Chancellor is also proposing to force the Ministry of Defence to sell off much of its spectrum. Perhaps that is what he was referring to. I tabled a named-day question that should have been answered before this debate began, seeking clarification from the Treasury. I have not received that clarification, and I must tell the Economic Secretary that while I realise that some of my speech has been knockabout in style, this is an extremely serious point. If the Chancellor plans to take too much money from the sale of spectrum by Ofcom, he may have a devastating effect on a whole sector of the economy that I know he does not actually wish to harm. I seek reassurance, and the answer that I should have had today.
	Let me end with a plea for Worcestershire to receive a fairer share of education spending. The Budget claimed to put education at its heart, but—probably rightly—kept education spending increases in line with growth in gross domestic product. The hon. Member for Worcester (Mr. Foster) denied that in a radio interview in which I took part with him last week, but it is true: 2.5 per cent. is the figure. That means that the years when it would have been easy to reduce the growing gap have been wasted. I refer to the years in which everyone was receiving larger increases. Those were years when a slightly higher percentage for the least well-funded local education authorities, such as Worcestershire, could have been offset by slightly smaller increases for LEAs such as Birmingham. If that had been done, the gap would have been painlessly closed.
	In fact, those years were worse than wasted. Because of the iron law of compound interest, places such as Birmingham became immeasurably richer, and shot ahead of Worcestershire in terms of per-pupil funding. Now that future increases in the overall budget will be so much more modest, it will be harder to close the gap without squeals of pain from people at the top of the league table of expenditure who have grown used to living on their high spending.
	Hopeful signs are emerging from the Department for Education and Skills that there is at last some understanding that there is a real problem that needs to be addressed, and I am encouraged by some of the things I heard from the f40 conference at the weekend, but solving the problem at a time of relative financial stringency will be very much harder. For me, and for Worcestershire, these are the politics of a regrettably political Budget.

Kelvin Hopkins: I commend my hon. Friend the Member for Islington, South and Finsbury (Emily Thornberry) on the passionate section of her speech which dealt with housing. That is the big issue facing my constituents as well as hers, and I have many similar stories to the one that she related in such strong terms.
	Thirty years ago, when I was vice-chair of housing in Luton, we had a housing waiting list half the size of the present one. We thought that a waiting list of 4,000 was outrageous, and we built houses to accommodate all on the list when the economy was supposedly weak. Now that we have a strong economy, somehow we cannot afford to house the poor. That is a disgrace, and we should reverse the position very quickly. It is the No.1 issue for my constituents.
	I also commend my right hon. Friend the Member for Oldham, West and Royton (Mr. Meacher). I think I agreed with almost everything he said in his speech, but as we generally agree on many things in politics, that is not particularly surprising.
	I want to talk about the environment, and particularly about energy and renewable energy, as that is the headline subject of the debate. The Government have gone some way in the right direction in the Chancellor's Budget, but we have not gone anywhere near far enough. My hon. Friend the Member for Nottingham, South (Alan Simpson) spoke last week, and he said that in Germany there are a hundred times more buildings with solar roof panels than there are in Britain. That highlights that something is fundamentally wrong. He also mentioned the renewable energy approach taken in Freiburg, where I understand that a third of people cycle to work. The Germans are far ahead of us, and our Government and Chancellor must go much further.
	In terms of renewable energy, there are many other areas in which we could improve. We should be building barrages across the Thames and the Severn to generate electricity. They would also help in defending us against rising sea levels, which will occur as a result of global warming. If we do not do that on the Thames and do nothing about rising sea levels, we in this Chamber might find that we have wet feet. A barrage across the Thames—another barrage—with generators right across it would be beneficial in many respects.
	There are many other forms and sources of renewable energy, such as geothermal energy and biofuels. If we were to invest heavily in them—including in wind, wave and tidal power, and in solar panels—we would not need nuclear and we would be become strategically much more independent. At present, we are heavily dependent on imported gas. That gas comes from countries that are currently sort of friendly, and it comes across countries that are sort of friendly. Even the Germans were recently made very pleased by the fact that gas is delivered to us through Germany; that gives them a certain political leverage, which might be useful in the future. We are aware of the situation that arose between Russia and Ukraine. Ukraine was beholden to Russia for its gas, and we do not want to be in that situation. The more independent we become by producing renewable energies, the better it will be for us in every sense, making us a genuinely independent democratic country and not at risk of having political difficulties in the future because we import much of our energy.
	My right hon. Friend the Member for Oldham, West and Royton said much of what I wanted to say on pensions. He said that it would be difficult quickly to raise the basic state pension towards the level of 25 per cent. of earnings, which was its level before the earnings link was cut. However, I suggest to Members—including the Chancellor—that it is possible to achieve that, and that if we have the political will we can do such things. Six or seven years ago, we had the lowest level of basic state pension in Europe by a considerable margin, and I think that that is probably still the case. The next lowest level was £150 a week, which was the rate in Germany. We have a long way to go to catch up, and to set a target pension worth 25 per cent. of earnings would be thoroughly justifiable.
	How would we pay for that? We would have to do many things, and I suggest that we should start by raising revenue, which would mean raising national insurance contributions. I recently tabled a written question on that, asking that we remove the upper earnings limit and have a standard percentage all the way up the income scale. That would bring in £6.6 billion, which could go straight into pensions. An hon. Friend has asked a question about the current surplus in the national insurance fund; it is about £73 billion, which is a considerable sum. I know that it is useful for the Treasury to be able to live off the income of that surplus, but we should use some of that surplus to boost pensions now.
	We must also go further in order to raise income to finance a higher basic state pension, but it is not impossible to take the necessary measures. We could secure income from other areas. There is an entire chapter in the Institute for Fiscal Studies green Budget report of this year about VAT fraud, which currently amounts to about £1 billion a month. We should pursue that fraud more assiduously. If we could get back just half of that sum, that would give us an extra £6 billion a year. There is also a massive gap in other areas between the tax that should be paid and how much is actually paid. Some people suggest that the total tax gap is more than £100 billion a year. That sounds like a phenomenal figure, but even if it was half that and we got half of that amount, we would have £25 billion a year in extra income. Such is the sum that we would receive if we pursued that taxation rigorously and assiduously. The Chancellor should do that. Some years ago, I went to my local VAT office where I was told that for every extra VAT officer employed, five times the salary of that officer could be collected—apparently, that is true in other areas of revenue collection as well. I wrote to the Treasury suggesting that we employ many more VAT inspectors and thereby collect much more revenue.

Graham Stuart: Does the hon. Gentleman accept that one of the problems that might have caused the failure to collect tax is the over-complication of the tax system by the current Chancellor, and that if we had a simplified system that would cease to demoralise the honest—which is what currently happens—and to give opportunity to the dishonest, as is also currently the case?

Kelvin Hopkins: I agree with the broad principle of the hon. Gentleman's point. The tax system should be much more simple. I would get rid of a lot of tax reliefs and tax allowances and I would build the system much more towards having a progressive income tax, rather than retaining the other taxes that I agree are more complicated.
	I should remind Members that income taxes are currently substantially lower than they were in the 1970s. I acknowledge that there was a shift from income tax to VAT, but even if that is taken into account the level of income tax that is paid now is tiny, particularly at the top end, compared with the level in that period. I remember the figures well—I am of an age to do so. The top marginal rate when Jim Callaghan was in office—which I call the golden age of socialism—was 83p in the pound, and in addition there was a 15 per cent. unearned income surcharge. Therefore, some people—the genuine billionaires—were paying 98p in the pound on the top part of their income. I do not suggest that we should go quite that far, but I do suggest that a compromise position in respect of those people could be found that is between that 98 per cent. rate and a 40 per cent. rate.
	I have looked at some figures, and I do not think that many people would object if we were to have a 50 per cent. income tax rate for those on £60,000 a year of taxable income, and if that were to increase to 60 per cent. for those on £80,000. Certainly, we in my constituency would throw our hats in the air, because we would know that we could pay off our hospital and health service debts immediately with the extra income.

Brooks Newmark: Some people might well throw their hats in the air, but I suspect that the people in the Treasury would be throwing up, because the reality is that most of such people can move, and they would leave the country and thereby leave the country with a tax shortfall.

Kelvin Hopkins: The odd pop singer or footballer might leave the country, but that would not seriously damage our economy. Let me draw attention to the Organisation for Economic Co-operation and Development statistics on top marginal personal income tax rates for employees in 2006. All the following countries have considerably higher top marginal rates than us: France, Japan, Italy, Sweden, Finland, Germany and Denmark. Denmark's top rate is 62.9 per cent. and Germany's is 60.5 per cent. and ours is down at 41 per cent. I suspect that floods of wealthy people have not left those countries, thereby damaging their economies.

Graham Stuart: Is the hon. Gentleman aware that 40 per cent. of the total receipts for income tax come from just 5 per cent. of income taxpayers, and that if even a small percentage of them were to go abroad there would be a massive hole in the public finances, and also that it would be the poorest and weakest in our society, and the public services that they depend on, that would be undermined?

Kelvin Hopkins: I just do not believe that. Some people whose income is at the top end of the tax system might even think that it is a good idea to pay a little more tax and to make a bigger contribution to society. Some years ago I had lunch in the City—I do not often go to the City—and I talked with people who had been watching television when Nigel Lawson announced his 1998 Budget in which he cut the top marginal rate from 60 per cent. to 40 per cent. They were all amazed; "But we do not need the money", they said. They were City people, who are probably represented by Opposition Members. I suspect that not many people would leave the country if there was a higher rate of tax, and that that would certainly not change the way that most people voted. I might be being unkind in saying this, but I suspect that a lot of rich people vote for the Conservatives rather than Labour, but people who support the Labour party and who earn such levels of income would also certainly not change their vote if we were to become a little more socialist.

Greg Hands: Will the hon. Gentleman consider the reverse flow? A lot of people are coming to the City of London and to my constituency from continental European countries, which have significantly higher income tax regimes. One reason why they come to work in the City is to escape those higher tax regimes. Does he not share my fear that if we equalled those regimes, all those people would go back again?

Kelvin Hopkins: I have no doubt that there would be some marginal effects, but I suspect that they would not be anything like as significant as the hon. Gentleman suggests, and I doubt whether they would damage our economy. I have looked at other successful economies—particularly in Scandinavia, where they have much higher tax rates—and people do not leave in droves. Those countries are doing very well; indeed, their growth rates in the past year or two have been higher than ours.

Greg Hands: I thank the hon. Gentleman again for giving way again; he is being very generous. Is he aware that according to the latest figures for my constituency, some 11 per cent. of its residents come from other EU countries? The figure is even higher for Kensington and Chelsea.

Kelvin Hopkins: They are very welcome and I am happy to see them here; they are no doubt making money and repatriating some of it to their own countries. Such effects might prove marginal, but they would not have a fundamental impact on our economy. What would have such an impact is greater income, collected in a much fairer way, for spending on the poor and the needy, and on public services. We need to make a serious attempt at redistributing income that goes some way back toward the position in the 1970s—and, indeed, in the 1950s and 1960s, under Conservative as well as Labour Governments. The people of Britain would massively welcome our moving in that direction—toward the social democratic regimes of Scandinavia—and it would not be economically damaging. That is the direction in which I want to go, and I urge my hon. Friends on the Front Bench to give serious thought to such ideas.
	I have probably said more than enough, but I shall mention just one or two minor—not for my constituents, but in terms of the national budget—and local points. The pressures on health spending this year have caused serious difficulties in my constituency. We have the poorest health in the region, the biggest health inequalities and serious problems with heart disease and other illnesses. However, we have suffered the biggest cuts as a proportion of our budget, because of the squeeze on health funding this year. The strategic health authority has just inflicted a blanket cut, top-slicing everyone, and it has savagely affected Luton. We have effectively had £1 million a month cut from our primary care trust, which has had serious effects on my constituents.
	The health service's total debt this year is about £1 billion, which is what we lose to VAT fraud in one month. It is not a large sum of money in the overall scheme of things, and I urge my hon. Friends on the Front Bench not only to promise jam tomorrow—we know from the Budget that for the health service, there is jam tomorrow—but to lift the spending constraints now, so that we can immediately start putting back what has been cut this year. We have had some serious cuts in the health service locally, and my constituents are suffering. I have written at length on three occasions to my right hon. Friend the Secretary of State for Health to make those points in detail, and I have given figures, too.

Helen Goodman: Is my hon. Friend aware that next year, spending on the NHS will rise by 10 per cent?

Kelvin Hopkins: Indeed I am, and I am very pleased about it. However, it is unfortunate that instead of smoothing out spending, there is serious pressure this year, with much more money to spend next year. Cuts are affecting us now, and a bit of next year's money ought to be brought forward now to relieve our health spending crisis immediately.
	Finally, I have said many times that we ought to move quickly towards free funding for long-term care. A royal commission recommended that some years ago, and we have had early-day motions—I myself tabled two in two Parliaments—calling for free long-term care, which more than 100 Government Members have signed. This has been a big issue on the doorstep. I do not want working-class people who have bought for the first time in their family's history a little terraced house, or even a council house—I do not approve of that principle, but it is understandable that they would wish to buy it because it is a bargain— to be forced to sell the little bit of equity that they have because granny then starts suffering from dementia and they have to pay for her care.
	That situation is unacceptable, and it would be much better if we shared the payment for long-term care generally throughout the population—we could have a hypothecated tax, or perhaps a small capital gains tax on houses when people die, if one wanted to have a link to the housing market—to ensure that no one had to pay out of their own pockets for any component of care in the future. I urge my hon. Friends on the Front Bench to give serious thought to that idea, and to recognise the wisdom of the royal commission's report all those years ago.

Greg Hands: It is a great pleasure to follow the hon. Member for Luton, North (Kelvin Hopkins). He and I agree a great deal on things such as the European Union and other foreign policy matters, but regrettably we do not agree about much, if anything, on the economy and taxation.
	The hon. Member for Islington, South and Finsbury (Emily Thornberry), who is a fellow inner-London MP and a member of the Select Committee on Communities and Local Government, did her cause a poor service by not giving way for interventions. She does not have exclusive knowledge of inner-London problems. She mentioned that her constituency is the sixth poorest in the country. At least until recently, the index of local deprivation said that my borough was the 18th poorest, although I represent some areas of wealth, too. That does not give me an exclusive right to talk about poverty and deprivation either.
	It is certainly not for me to defend the Liberal Democrat council in Islington, but I noticed the hon. Lady's opposition to choice-based lettings. It is worth noting that it is mainly Labour rather than Lib Dem councils in London that promote choice-based lettings, so I am intrigued by her opposition. It is of course always worth mentioning that this Government are building less social housing than the Conservatives built in the 1990s.
	This has been an excellent Budget debate so far, and fascinating to follow from its beginning at 12.31 pm last Wednesday. The fascination has been not so much with the Budget itself, but with the way in which it has been assessed and reported. Every year under this Chancellor, the initial positive coverage has given way to a more considered assessment. This year was no different—only that the Budget unravelled even quicker than usual. We saw the initial cheering on the Labour Benches behind the Chancellor, but by the opening of today's debate three Labour Back Benchers were present. At one point we were down to two; we went up to a maximum of five; and it looks like we are back down to four at the moment. It seems that the Chancellor gave his incomplete view of the tax changes merely to put the Leader of the Opposition on the wrong foot, and to gain a cheer from his own side. If so, that is an absurd way to run the finances of the world's fourth largest economy.
	The Chancellor's speech gave us only half the story, and the whole Budget took me back to my childhood in the 1970s when we had a black and white television of dubious quality with a grossly distorted picture. The distortions on the TV were amazing—people had elongated foreheads, and I remember thinking that the poor bald man who presented the cricket in those days looked like a cucumber. The most tragic thing for me was at 4:45 pm each Saturday, when "Final Score" came on, and the far right-hand side of what should have been on the screen was not visible at all. One could see the home team score and one could cheer if one's team had scored three goals, but I had to wait until the next day's newspapers to find out the complete score, and realise that one's team had lost 3-4.
	It was very much like this Budget. I shared with Government Members an initial cheer when I heard the 2p cut in the basic rate of income tax, but it turned to dismay when I learned that it was more than made up for by the abolition of the 10p rate and the increase in national insurance contributions. In fact, the cut in the basic rate cost £8 billion, but the other increases will raise about £8.4 billion.
	Away from the big picture, I wanted to address four specific issues faced by my constituents that have not been raised in the debate in any detail. The first is stamp duty, or more precisely, stamp duty land tax. According to Her Majesty's Revenue and Customs, the stamp duty yield from residential property throughout the UK has gone up sevenfold under Labour, from £675 million in 1996-97, to £4.6 billion in the last financial year. In London, during the past 10 years, there has been an eightfold increase. Five times as much of that tax is raised from London as from Scotland, and 16 times as much in London as from the whole of the north-east.

Helen Goodman: Why is that?

Greg Hands: I am coming to that.
	The yield from all stamp duties is projected to rise from £10.9 billion last year to £14.3 billion in 2007-08, all because the higher thresholds remain at £250,000 and £500,000, and there is no sign of the Chancellor upgrading them in line with inflation—past, present or future. It is a London stealth tax. Because the average London home price is more than £300,000, and far higher in constituencies such as mine, and because the percentage rate rises from 1 per cent. to 3 per cent. at the £250,000 threshold, the majority of London home buyers need to find at least £7,500 in cash just to buy a property, and that is on top of the deposit, survey fees, legal fees and so on.
	The effects of stamp duty banding are serious. It is a mobility tax and combined with the inflexible policies pursued by many councils, such as preventing otherwise reasonable loft extensions, the huge rises in stamp duty land tax are making previously uneconomic home improvements worth while; for example, light wells and basement conversions, which have sprouted up all over Fulham and south Hammersmith, especially since the punitive stamp duty regimes came in. Light wells tend to flood, and there is a real fear that their increasing prevalence may lead to long-term structural damage to neighbouring properties. Ironically, my constituency is reckoned to be one of the first in Britain that would disappear if some of the more dire predictions of global warming were to come true. The flooding may get much worse.
	The impact of stamp duty on mobility in London is severe and leads to a number of effects that other Members frequently remark on in their constituencies. Before the big increases in stamp duty, families used to move within Hammersmith and Fulham when they wanted more space because of, for example, an expanding family, or even just a better-paid job. Now, the move from a two-bedroom house, perhaps costing £450,000, to a £600,000 three-bedroom house will cost £24,000 in stamp duty alone, plus the extra £150,000 difference between the two sale prices.
	If we compare the £24,000 stamp duty bill with a loft conversion costing on average £35,000, a side conversion costing £45,000 or a light well at around £60,000, we start to see why such home improvements are all the rage. An argument might be made that those buying and selling simultaneously should pay stamp duty on the difference between the prices of the two homes, as long as they are below a certain level and there is a minimum fee. In my view, that idea should be explored. It would be rather like capital gains tax, which is paid only on an increase in asset price. It might be said to discriminate against first-time buyers—I shall come back to them—who, by definition, have no property to sell, but I believe that the proposal would have an impact on the supply of homes to the market, in London in particular, which would have a huge knock-on benefit for first-time buyers. It would also encourage people, mainly retired, who wanted to trade down the size of their home, because they would end up paying no stamp duty and would thereby free up a family-sized home for another buyer. We could also look at schemes such as those in Australia where first-time buyers can be exempt from stamp duty.

Peter Luff: I am grateful to my hon. Friend for making those important points about the impact of stamp duty on mobility in the labour market and housing market, but I urge him to pursue the argument with our Front-Bench colleagues because it is not just in London that it is a major issue. I can tell him from my personal experience that it is a problem around the country, with people delaying housing changes that they might have made because they do not want to write out a very large cheque to the Chancellor of the Exchequer.

Greg Hands: My hon. Friend is quite right. The problem extends throughout the south-east, parts of the south and probably into Wales, the north of England, and doubtless elsewhere. It is certainly not exclusive to London.
	Mobility is vital to the housing market, yet the Chancellor has done a great deal to harm it. At the moment, the supply of homes is severely constricted as prices continue their meteoric rise, as demand vastly outstrips supply. It has also had an effect on second homes. One hears constantly from Members with rural constituencies—for example, in Cornwall, where I first lived in this country—about the impact of Londoners and others from the south-east buying second homes, and it is important to understand the economics.
	Ironically, many of the professional people in my constituency are more tempted to buy second homes than they used to be, by the perverse effects of stamp duty land tax. Someone in my London constituency with £100,000 of capital and mortgage financing could spend that sum on two extensions to their home—a loft extension and a side extension to the kitchen—or they could move within Hammersmith and Fulham or within London and trade up to a house with an additional bedroom, but they would have to pay the Exchequer stamp duty of between £20,000 and £30,000 to do so. Increasingly, my residents take a third option: to buy a bolthole in the country for their extra space.
	I was looking at the prices advertised by an estate agent in Looe, in Cornwall, where I spent a large part of my childhood: a one-bedroom cottage was on sale for £90,000. For many of my constituents, getting their additional space at that price would be extremely attractive, because no stamp duty whatever would have to be paid on that home. Given the punitive taxes on moving, is it any wonder that many of my constituents find their extra space by building extensions of doubtful wisdom or buying second homes in far-away places, adding to all the other effects we dislike about that trend, such as carbon emissions, road and rail congestion and rural depopulation?
	I want to talk about some of the effects in my constituency of NHS deficits and of the poor management of the NHS and its financing. The Chancellor mentioned the NHS only once in his speech, which may not be surprising when we consider how his meddling has undermined health services in my constituency. Since the last Budget, Ravenscourt Park hospital has closed—a remarkable fact; but even more remarkable is the fact that the closure took place only four years after the hospital opened. The chief executive of the hospitals trust announced 150 sackings at the time of the closure, yet when the hospital opened four years ago he said:
	"The NHS is people hungry. It needs skilled and qualified people and that is why we are scouring the world."
	He went on to describe how he was hiring people from Germany, Australia and so on, yet such is the boom and bust, or feast and famine, in the NHS, that only four years later the new hospital was closed.
	When I raised the matter last year, the Secretary of State for Health told the House:
	"The hon. Gentleman has fallen into precisely the trap that so much of the media have and that I warned against earlier: those are not sackings."
	However,  Hansard then records the riposte:
	"Hon. Members: 'Yes, they are.'"—[ Official Report, 7 June 2006; Vol. 447, c. 269-70.]
	Remarkably, a few weeks later I received a letter from a sheepish Secretary of State apologising to me, stating that she needed to make a correction and that they were indeed sackings. In Hammersmith and Fulham, as is the case across a large part of west London, we await with bated breath the impact of the hospitals reorganisation that is likely to be announced in the summer and its effect on services at the Charing Cross hospital in the heart of my constituency.
	The third important matter for my constituents is the specialist area of funding for British films. Hammersmith and Fulham is a centre for the British film industry and for a large number of other media jobs related to it. The criticism from the sector is not that the Government have neglected it, but that they are constantly chopping and changing their policy on it. A producer who visited my surgery this morning told me:
	"It's as if every producer in this country is trying not to make films here...outside of this country, producers have given up on us altogether."
	Film policy is a shambles, I am told. Since 2000, the Government have made 12 major changes to film policy. It is impossible to secure the long-term funding that is needed to make films, partly due to the fact that some of those changes in policy have taken place with retrospective effect. The attitude from many of the funders is: once bitten, twice shy with the UK film industry.
	For example, almost the entire industry used to use sale and leaseback finance. That was replaced in last year's Budget, quite suddenly, by a scheme of tax credits. Unfortunately for the British film industry, not only did few understand the new tax credits—that might sound a little familiar to my colleagues—but the new scheme did not take effect until 1 January this year. Between the last Budget and 1 January 2007, there was no support at all for the British film industry.
	The effect of all that chopping and changing is not always apparent to the general public. The general public see us winning a few Oscars or they see a couple of films that look like they were probably made in Britain or about Britain, but the British film industry is in deep trouble. For example, one company that was going to make a series of six Beatrix Potter films in the UK is now going to Louisiana. Classic British titles, such as James Bond and Harry Potter, are moving out of the UK. We need consistency and intelligence in how we support the British film industry.

Peter Luff: I do not know whether this is good or bad news, but the concerns that my hon. Friend has expressed, which I share, about taxation and the film industry could become entirely irrelevant, because if Ofcom's auction of the spectrum goes ahead as currently planned, there will be no radio microphones so it will become impossible to make films at all in this country.

Greg Hands: My hon. Friend is an expert on these matters. Often, when I have tabled questions on spectrum issues the answer that I receive states, "I have nothing to add to the answer given to the hon. Member for Mid-Worcestershire (Peter Luff)." I have great respect for his views on these matters, which I share.
	The fourth area of importance for my constituents is council tax. If the Chancellor wants to take lessons in how to set a budget, he should take a short, 25-minute tube ride to Hammersmith station, get off and make the five-minute walk to Hammersmith town hall. The Hammersmith and Fulham Conservatives have shown how to set a real budget. Together with my hon. Friend the Member for Brentwood and Ongar (Mr. Pickles), I attended the budget meeting of the new council last month. The 3 per cent. council tax cut will ensure that Hammersmith and Fulham residents are set to be the only people in the country to receive a reduction in their council tax bills this year. A further programme of tax cuts was announced for the next two years as well. There were no stealth taxes or tax cons—unlike in the Chancellor's Budget. It was a pure cut in the basic council tax rate. The new administration ran on a clear policy of a tax cut to bring council tax down to Wandsworth's levels within two terms, over eight years. What a shame that we do not hear that level of ambition from Members on the Labour Benches. The Hammersmith and Fulham councillors were elected as tax cutters and I am sure that they will govern that way as well.
	After 18 years of Labour mismanagement, my local council is making real improvements and councillors are starting to turn around a council that was previously handicapped by bureaucracy, political correctness, red tape, unions and vested interest. Hammersmith and Fulham council is on its way to becoming a model Conservative council, delivering high-quality value-for-money services to all. In the last week, it has come under attack from Polly Toynbee. I am not one of those Conservatives who is a great fan of Polly Toynbee.

Helen Goodman: A split!

Greg Hands: Perhaps there is a split: a split between two Gregs.
	The mistake that old left wingers such as Polly Toynbee insist on making is in thinking that higher tax equals better services and that lower tax means cutting services. In Hammersmith and Fulham, we are demonstrating that that is not the case. The 3 per cent. council tax cut has been well documented, but the council is also spending new money on the things that matter to residents. It is investing £1.5 million over the next two years to pay for round-the-clock beat policing in our town centres, as well as spending more on schools and, as was mentioned earlier, providing free personal care at home for our most vulnerable residents. It is one of only two councils in London to do that. We talked earlier about the NHS, but, although the health budget has increased in recent years, council social care budgets have not been keeping pace with need. That needs to be addressed seriously in next year's budgets.
	There are tough decisions to be made in my local authority. For example, despite investing nearly £500,000 extra in social care, the council is having to balance finite resources with an ever-increasing demand for services. The funding from the Government has not kept pace with the demands of an ageing population. The funds have increased by just 14 per cent. in real terms since 1997.
	For my constituents in Hammersmith and Fulham, the Budget has been in general very unwelcome and will hit people quite hard. More generally, Britain is heading in the wrong direction. Under Labour, we have fallen eleven places in the international competitiveness league. Tax is rising rapidly, inflation is the highest for 16 years, unemployment is going up, and interest rates are rising. Britain is over-taxed. We need lower, simpler and flatter taxes, and I look forward to a new Conservative Government delivering them.

Martin Horwood: Today's debate has been intriguing. At some times, it has seemed like a hustings for the Labour party leadership and at others like an episode of "Play School", in which we have had Conservative speakers quoting long passages from "Alice's Adventures in Wonderland" and, earlier, holding up pieces of paper with coloured paint blobs on them. I will commend those to my five-year-old daughter Maya and my two-year-old son Sam, who I am sure will be impressed, but if hon. Members do not mind, I will move on to more serious issues.
	As many hon. Members have pointed out, at the heart of the Budget is essentially a tax con. The Chancellor of the Exchequer gave away some £8 billion by cutting the basic rate of tax from 22 to 20 per cent., but largely offset that by doubling the starting rate of tax from 10 to 20 per cent. This tax measure therefore joins a long list of measures introduced by this Government and then abolished by them a few years later.
	The measure was probably designed to fool about three audiences, since it could never have been expected to fool serious analysts. The first audience was the Chancellor's supporters on the Labour Benches, who, astonishingly, cheered a Budget that doubled the rate of income tax for those on the very lowest incomes and raised it for many others earning less than £18,000 a year. The second audience that it was designed to fool was the right hon. Member for Witney (Mr. Cameron), who in his initial response to the Budget said that it was a vote-grabbing tax cut, which is the phrase that I was trying to get my mouth round earlier when I intervened on the hon. Member for Mid-Worcestershire (Peter Luff).
	The third audience that the measure was designed to try to fool was the headline writers, but unfortunately in that respect it failed, thanks to my right hon. and learned Friend the Member for North-East Fife (Sir Menzies Campbell) and my hon. Friend the Member for Northavon (Steve Webb), who spotted the tax con at the heart of the Budget. The Chancellor, who had hoped to gain a reputation as a tax cutter, instead reconfirmed his reputation for sleights of hand.

Helen Goodman: Why does the hon. Gentleman think that there is anything dishonest whatsoever about having structural changes that are fiscally neutral?

Martin Horwood: I am grateful to the hon. Lady for her intervention. I will come on to whether the changes are fiscally neutral for poor families in a minute—well, in fact, why not straight away? There were many costs to this piece of political theatre. One is going to be paid by the lowest-paid in our society. Labour Members will argue that the cost of doubling the starting rate of income tax will be offset by tax credits. Tax credits are clearly a favourite of the Chancellor. But the Government's figures, in the Budget documents, show that only 82 per cent. take up child tax credit at the moment. That means that 18 per cent. do not. Only 65 per cent. take up working tax credit, so again a large number of families miss out on a benefit that is designed to offset the rise in income tax.
	Many of us are aware from the casework that we get in our surgeries and constituencies that, even among the families that do claim tax credits, the repayments that are an integral part of the system cause particular families huge problems when they are called upon to repay adjustments. It would be far better to do the right thing with the tax system from the start than to do the wrong thing and then introduce a complicated system to try to compensate for it. We need real tax breaks for the lowest-paid, which can be paid for by green taxes.
	The piece of trickery with income tax also has a cost for charities. Income tax is crucial to the earning of gift aid by British charities. The Chancellor has breath-taking cheek, because in his statement, he said:
	"Our culture of volunteering and giving defines Britain as a fair and compassionate society."
	Almost in the same breath, he went on to say:
	"My right hon. Friend the Chancellor of the Duchy of Lancaster and I will consult the charitable sector on measures that we will fund to increase take-up of gift aid".—[ Official Report, 21 March 2007; Vol. 458, c. 823.]
	Well, they will need to fund quite a lot, because the damage to the income of British charities from gift aid is estimated by the Charity Finance Directors Group at 11.4 per cent. of current gift aid receipts, or some £70 million.
	That is the situation before we consider the Lyons report's simultaneous recommendation of removing charities' council tax relief, although I hope that, when the recommendation is considered, it will be rejected. The finance director of Oxfam estimates that the changes to income tax and thus gift aid will cost that charity alone £1.8 million. The World Wide Fund for Nature has told my office that the changes will cost it something like £400,000. How will the measure help international and environmental charities like these to assist us in the battle against climate change?
	The environment is the most important challenge facing the Chancellor and the Government when developing their policies, including their economic policies. The Chancellor's comments on the environment sounded quite ambitious. In his Budget statement, he said:
	"our objective is that we have not only the most economically competitive but environmentally sustainable companies".
	He boasted:
	"Since 1997, business and Government together have achieved a 25 per cent. reduction in the carbon intensity of the economy."—[ Official Report, 21 March 2007; Vol. 458, c. 821.]
	When I spoke this morning to an ambitious company based in my constituency called Commercial, it told me that it was aiming to save not just 25 per cent., but 75 per cent., of its carbon dioxide emissions in only three years, which makes the Government's ambition look a little pathetic.
	Commercial is one of the dynamic small and medium-sized enterprises that make up 99 per cent. of UK businesses. Given that those enterprises provide 59 per cent. of UK jobs and create 51 per cent. of UK turnover, they make up a vital sector. However, they are neglected by many of the Government's environmental measures. For example, as Commercial has only 130 employees, it is too small to receive an onsite visit from the Carbon Trust to help its programme.
	How is Commercial planning to achieve such a drastic reduction in emissions? It is trialling low-energy light bulbs to replace not only traditional incandescent bulbs, but all its high-intensity halogen bulbs. It is encouraging its employees to walk and cycle to work and providing showers on site for those who do. It is also encouraging its customers to look at competitively priced and high-quality recycled paper instead of more traditional paper stock. I did not notice any measures in the Budget to help Commercial in any of those initiatives.
	The most important plank of Commercial's carbon-reduction programme is shifting its van fleet from fossil fuels to biofuels. Its ambition is to achieve not the 5 per cent. target on biofuels by 2011 envisaged under the renewable transport fuels obligations, but a 75 per cent. biofuel-powered fleet in three years. When I showed the Chancellor's measures on biofuel to Mr. Simon Graham of Commercial, he was not very impressed. He said:
	"Personally, I think the initiatives are piecemeal, driven by promoting technology rather than providing value, difficult to find and apply to, difficult to plan with ... and seem to be directed away from the SME sector. What would be so much better from my point of view would be to have a system based simply on a given environmental benefit (say reduced CO2 or waste going to landfill) by whatever technology".
	However, I have to give the Government some credit because some elements of the Budget were designed to support biofuels. The fuel duty differential of 20p a litre will be extended to 2009-10. That is welcome, in that it does not stop doing something positive. The lightening of the burden of regulation on biofuels is also welcome, although an opportunity was missed to differentiate clearly environmentally beneficial biofuels and harmful biofuels that cost more in energy than they save and that are grown at the cost of biodiversity in the rain forests. Although the Government have said that they are exploring the question of providing certification for the biofuels that are most environmentally-friendly, a standard is already on offer—EN14214—although it was not mentioned in the Budget.
	The Government have also produced an incentive of a 2 per cent. discount on company car tax for those using bioethanol, but as the spokesman for Commercial said, the measure is a drop in the ocean that is targeted at one specific biofuel. Why not give an incentive that applies to all biofuels that reduce CO2? The Government plan a 100 per cent. first-year capital allowance for biofuel plants and have made an announcement on an international taskforce involving Brazil, South Africa and Mozambique. While both those steps are welcome, will they tackle the major obstacles to the take-up of biofuels faced by companies such as Commercial? Simply put, the answer is no.
	A major barrier to the take-up of biofuels that stands in Commercial's way is manufacturers' warranties. In some countries, certain warranties will protect a vehicle using as much as 100 per cent. biofuel. However, in the UK, manufacturers generally offer a warranty only for cars using as much as 5 per cent. biofuel. What incentives does the Budget give for diesel car manufacturers to get their act together? None, sadly. The Secretary of State said earlier that Professor Julia King has been asked to examine technological developments, but she is being asked to look at developments over the next 25 years, which is too long. If the programme is successful, it will come too late for the drastic change that we need to make in the next 10 years.
	If hon. Members need any reassurance that we are dragging our heels on biofuels, let me quote someone who knew what he was talking about at the time:
	"The use of vegetable oils for engine fuels may seem insignificant today. But such oils may become in the course of time as important as petroleum".
	That statement was made by Rudolf Diesel himself in 1912. The diesel engine was originally designed with peanut oil in mind. Green Fuels, another company in my constituency, assures me that, if the problem with manufacturers' warranties could be tackled, many vehicles on the roads today could happily run on 80 per cent. or even 100 per cent. biofuel. The technical barriers to such a move, which would make an enormous difference to this country's carbon emissions, would be quite slight.
	Let me turn to household microgeneration. I am afraid that the Budget is the latest in a long line of muddled, short-term and inadequate initiatives on microgeneration, especially household microgeneration. Let me share the grisly details with hon. Members. The £10 million clear skies programme, which started in 2003, had to be boosted by £2.5 million and extended to March 2006, presumably to bridge the gap until its successor, the low carbon buildings programme, was ready. The photovoltaic demonstration scheme, which started in 2002, had to have its budget of £26 million to £28 million boosted by £750,000 so that the scheme would last until March 2006. Phase one of the LCBP itself was launched in April 2006. Its budget was originally £30 million, although it actually received only £28.5 million because £1.5 million was used for the bridge funds from the old schemes. The programme was supposed to last for three years, but only £6.5 million of the budget over those three years was for households, so there was barely half as much available for households as when the clear skies programme and PV demonstration schemes were running.
	In a letter to the then energy Minister, the Renewable Energy Association commented:
	"In 2005/6, £6.6 million was committed to household grants under the old programmes. But the equivalent LCBP household grant budget for 2006/7 is just £3.5 million, falling to £2 million in 2007/8 and £1 million in 2008/9".
	Since then, the household allocation has been increased twice. In October 2006, it was doubled to £12.7 million, but that was achieved through a reallocation from other LCBP funds. The Budget has added an extra £6 million, which is welcome given that the money really is additional, but that measure was immediately undermined when the Department of Trade and Industry suspended the whole programme. And of course, we have had the ludicrous spectacle in the past year of the Energy Saving Trust offering grants on the first day of each month and almost immediately running out of funds.
	I am not sure whether the right hon. Member for Witney managed to get such a grant for his urban windmill. I did not get one for my solar thermal panels, which were installed by So-lar Smart—yet another impressive and successful green company that is based in Cheltenham. However, the company complained to me last year that the stop-start nature of the Government's household microgeneration grants and incentives were causing it huge problems. I suspect that it did not gain much reassurance from the Budget.
	All in all, the Budget falls far short of the shift in the economy demanded by the Stern review. The Budget advocated simplicity, but delivered more complexity; it sounded fair, but on closer examination was not that fair at all; it sounded green, but on closer examination it let down many of the individuals and organisations who try to do their best to safeguard our futures. If the Secretary of State for Environment, Food and Rural Affairs is looking for an excuse to split with his right hon. Friend the Chancellor of the Exchequer, the Budget surely provides it.

Helen Goodman: I am grateful for this opportunity to take part in the Budget debate. I was pleased to hear all the firm environmental commitments that the Chancellor made last week, but I want to focus on the measures to reduce child poverty. I welcome the decisions that will lift 200,000 children out of poverty, and the recommitment to halving child poverty by 2010 and to abolishing it by 2020. I found the criticism that people could not understand the redistribution in the Budget rather strange. It is absolutely clear what the Budget is doing; it is redistributing money to families with children. The array of practical measures to support children who are living in poverty and their families is far better and more concrete than anything that has been offered by either the Conservatives or the Liberal Democrats.
	It is clear from the criticisms that we have heard that Her Majesty's Opposition basically do not understand the phenomenon of child poverty, which is presumably why they allowed it to treble under the last Tory Government. It has also become clear to us that the right hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) has completely misled his colleagues by suggesting that family breakdown is the prime cause of child poverty in this country. In January, there was a lot of talk about the UNICEF comparisons of child well-being among members of the Organisation for Economic Co-operation and Development, but I have looked at the more up-to-date comparisons between European countries by Jonathan Bradshaw of York university. They were published in a journal called  Social  Indicators Research in January this year, and they show that family breakdown is not the prime cause of child poverty in any of the European countries. Indeed, if we strip out the experience of the United Kingdom, we see that there is a positive correlation between child well-being and the number of single-parent families, with Finland and Sweden at the top of the table.
	That large, comprehensive study looked at overall child well-being. It referred to all the European countries and included 51 different variables, which covered the material situation of children, their housing, their health, their subjective well-being, what they thought of their situation, their education, their relationships, their civic participation, and the level of risk and safety for children. The key factors influencing child poverty were found to be income inequality, child poverty itself, obviously, gross domestic product per capita—that is, the overall wealth of a country—social spending and spending on children and families. That is why the strategy announced in the Budget for tackling child poverty is the right course of action.
	The key decisions that have been taken are absolutely what are needed to achieve reductions in child poverty. The increase in the child tax credit by £150 over the level of earnings growth, and the increase in the working tax credit threshold by £1,200, will have a significant impact. In my constituency, nearly 4,000 families and nearly 7,000 children will benefit. Those changes to tax credits are worth £2 billion in total, and that will be far more effective than the increase in tax allowances proposed by the hon. Member for Cheltenham (Martin Horwood). The problem with raising personal tax allowances as a route to addressing child poverty is that raising such allowances benefits the rich far more than the poor.

Martin Horwood: I beg to differ with the hon. Lady. As the lowest paid pay a higher proportion of the starting rate as income tax, surely they must gain proportionately more by its abolition.

Helen Goodman: The hon. Gentleman clearly did not listen, either to what I said or to what he said himself. I said that raising personal allowances would provide greater benefits for those at the top than for those at the bottom.

David Howarth: I simply do not follow what the hon. Lady is saying; what she says cannot be the case. If we increase the tax allowance at the bottom, that must be more favourable to those at the bottom than to those at the top, given the proportion of income taxed.

Helen Goodman: I am sorry, but the hon. Members for Cheltenham (Martin Horwood) and for Cambridge (David Howarth) are just revealing their complete failure to understand how the tax system works, and how the allowances operate at the top. If we slide all the allowances upwards, there is far greater benefit to the rich than to the poor.

David Howarth: Will the hon. Lady give way?

Helen Goodman: No, I have given way twice, and the hon. Gentlemen simply keep repeating their misunderstandings.
	Another benefit of the Government's approach of putting money into tax credits is the high take-up of tax credits. At the moment, 82 per cent. of those who are eligible claim tax credits, and 97 per cent. of those on incomes of under £10,000 a year claim tax credits, and that is a far more successful record than that of the Tory Government, who operated something called the family income supplement, for which the take-up was roughly 50 per cent. I welcome the increases in child benefit. It is clear that they will have a stronger impact in addressing child poverty than Opposition Members' rather bizarre suggestion of reintroducing the married couple's allowance. I simply cannot understand why they want to throw away money that they could use to good purpose, and to reduce child poverty, on people who are happily married, do not need the money, are high up on the income scale and may not even have children.
	Taken together, the changes that the Chancellor announced this week, and the other measures that he has introduced, will result in a positively redistributive effect over the period from 1997 to 2009. People whose household incomes are in the bottom 10 per cent. will experience, over that period, a rise in income of 27 per cent., whereas those in the top 10 per cent. will have their incomes fall by 1 per cent. A single-earner couple with mean earnings who have two children will get a rise in their income of £320. A single-earner couple on median incomes with two children will have a rise of £500. Contrary to what has been claimed by Opposition Members, a single-earner couple on half median income with no children will also have an increase in their annual income; they will get a rise of £175.
	One reason we Labour Members believe that it is important to address child poverty is that disadvantage is translated across the generations. Last week, the Cabinet Office published an interesting paper on families with multiple disadvantages, which showed that children with four experiences of family problems had a 70 per cent. risk of suffering multiple disadvantages by the time they were 30 years old. Interestingly, children from the 5 per cent. most disadvantaged households were more than 50 times as likely to suffer problems when they reached the age of 30 as children not in the top 5 per cent., but in the top 50 per cent.
	One of the disadvantages that is being looked at is the disadvantage of being the child of a teenage parent. In October, I undertook an experiment, and tried to live on the income support rate for people under 25. Using the information from York university, I found that that gave me £21 a week for food, taking account of everything else for which one might reasonably expect to have to pay. I wanted to see whether or not on that £21 I could have the kind of healthy diet recommended for pregnant women. At the end of the week, I had lost weight. Hon. Members may think that in my case that is not a problem and that there were advantages for me personally, but it is obviously not satisfactory for a pregnant 19-year-old to do so. I was therefore pleased by the improvements to benefits for pregnant young women. First, the Sure Start maternity grant is now £500, and it goes to young mothers on low incomes. Secondly, the payment of child benefit has been extended, and it will begin at week 29, so all mothers will be up to £200 better off.
	That sort of practical measure makes a genuine difference to the people who need it most. The Budget documents include measures to help young people who are not in employment, education or training, but may I point out to my hon. Friends a contradiction that should be addressed? At the moment, teenage mothers, if they are still at school, are expected to return to school 18 weeks after the birth of their baby. This April, we will extend maternity leave to 39 weeks, so I suggest that young mothers need at least as much time to adjust to their new role and bond with their babies as older mothers. We should bring targets for those young teenage mothers into line with maternity provision for the rest of the community.
	Frequently, what is said about children and child poverty is a way of thinking about how to construct a new and better society. Looking at things from a child's point of view offers a vantage point from which to offer critiques of society as a whole. It is the child's position as a future adult that is of interest to politicians. That has always been true—it was true in ancient Sparta, it was true under the Jesuits and it was true for Bismarck. That is largely because we know, or we think we know, that what happens to us as children is a significant influence on our lives when we become adults. It is extremely tempting to believe that by controlling the condition of childhood we can reach into the future and control the society that we want.
	I believe, however, that we should be concerned about child poverty for a more important reason. Children are not human becomings—they are human beings. Childhood is part of life. It accounts for about 20 per cent. of life, so it matters in itself, as well as providing a good basis and preparation for adulthood. It needs to be enjoyable and fulfilling. Last year, Shelter and "End Child Poverty" put together a collection of poems written by children living in poverty across the country. If anyone was in any doubt about the importance, urgency and significance of the need to address child poverty, they would not be after reading those poems. I want to end with a poem written for that book by an eight-year-old child in my constituency called Lucas. It is called, "I Can't Live There":
	"Damp with rats carrying germs,
	I wish I wasn't there.
	Leaking roofs, unstable floors, I hate,
	To be there.
	Teenagers telling me things I shouldn't know,
	I wish I was somewhere else, somewhere,
	Where I can live.
	Please help me Mr Government,
	I beg you, I plea."

Charles Walker: Thank you, Mr. Deputy Speaker, for calling me to speak in this important debate.
	Although today's debate centres on the environment, I should like to discuss the moral case for ending tax poverty. I believe that the Government's commitment to alleviating poverty is genuine, but I am concerned that there is a growing industry around poverty, with huge fortunes being spent on entrenching an immobile underclass. I am concerned that in the past 10 years, or perhaps even longer, the state has created an expanded pool of supplicants, with more and more people deriving an increasing share of their income from the state. It is wrong that those people should be patronised with benefits and hand-outs, which have a corrosive effect on their self-worth and self-esteem.
	There are perversities in the benefit system, which is, in itself, extremely complex. As an MP, I try to help my constituents navigate it, but often it is beyond comprehension. There are tens of thousands of pages of legislation, backed up by thousands of forms, classes, groupings and exceptions. In too many cases, benefit recipients simply have their own money laundered back to them, minus the Government's handling charge.
	As a Member of Parliament, I believe that all Members have a duty to ease the benefits burden on our constituents by making large parts of it redundant. It is certainly complicated. In  The Independent this weekend, Simon Carr wrote:
	"Gordon Brown's anti-poverty policy is literally unintelligible to ordinary people".
	It will not have escaped your notice, Mr. Deputy Speaker, that I am an incredibly ordinary person, and I find the Chancellor's anti-poverty policy unintelligible. In  The Sunday Times, economics correspondent David Smith wrote:
	"We are still light years away from a simple personal tax system".
	The tax credit system is so complex that many people do not even bother to claim. That money is theirs by rights, but they are put off by the complexity of the system.
	We have identified the fact that the very highest earners are getting richer, but the less well-off seem to be subject to more and more means-testing. That is a soul-destroying process, and it is not just or fair. It is wrong, for example, that tax is levied on pay rates once they exceed £2.65 an hour. Why should people earning the minimum wage or a sum just above it be forced to turn to the state to recover their confiscated earnings in the form of tax credits? Who is best served by that process? I do not believe that my constituents should have to go through that process to claim back money that is rightfully theirs. Another problem across our constituencies is the expanding poverty trap. Again, the Government are not deliberately making it bigger, but it is there. Some 2 million low earners still pay marginal rates of tax of between 60 and 90 per cent. Indeed, 200,000 people still pay marginal rates of tax in excess of 90 per cent. We in the House should not allow that to continue.
	What is the solution? The priority fiscal reform of any Government, Labour or Conservative, should be to reduce the taxes on low earners. We must take people out of the tax and means-tested benefits net altogether. If the greatest cause of poverty is worklessness, we must work to make work pay. Reducing taxation on low earners will not only ensure that people keep more of what they earn, but will have huge social advantages.
	In addition to encouraging people back into the work force, it will allow them to take jobs at or above the minimum wage, knowing that the money that they are earning will go into their pockets, and that they will be replacing the state as their family's major provider. What price does dignity carry? "I am putting the food on my family's table, not the Government"—many men and women would like to be able to say that.
	Reducing the tax on low earnings will start to liberate people from a benefits system that can, at times, be seen as callous. I know that that is not a deliberate ploy on the Government's part, but the benefits system can often seem remote and uninterested in people's everyday concerns. All Members of Parliament are familiar with Her Majesty's Revenue and Customs' phrase:
	"having looked at the information we hold and that you have provided, I consider that you should have been aware that your payments were wrong"—
	a mealy-mouthed phrase used by HMRC as justification for clawing back perhaps thousands of pounds of overpaid tax credits from bewildered and frightened families, who are sometimes left facing legal action for the recovery of moneys that they do not possess. That is not the action of a caring state. Most of those people notified HMRC of their change in circumstances, and HMRC failed to update and amend its records accordingly.

Edward Balls: Take the example of the working single parent to whom the hon. Gentleman refers, for whom the combination of the minimum wage and tax credits would lead to an effective hourly rate of slightly over £12 an hour. If tax credits were taken away from that lone parent, would she be poorer, or how would the hon. Gentleman make up the difference—by a higher minimum wage or by tax cuts? Could he explain that conundrum to us?

Charles Walker: The Minister makes a good point, and I am about to come on to it, but I will take no lectures from a Minister whose Department has just introduced a Budget that will leave people earning £18,000 worse off. The Minister should get his own house in order. I am trying to approach the issue in a non-partisan way and I hope he respects me for that.

Edward Balls: rose—

Charles Walker: No, I will not give way again.
	Over the next five years, I would like to see the tax threshold increased to £12,500. Anybody earning less than that would not pay tax. That requires an increase in the threshold each year of £1,500. Yes, the cost of the increase would be about £8.4 billion per annum. That sounds a lot, but in the 2007-08 tax year due to start in a week, the Government tax take is set to grow by £36 billion—that is, from £517 billion paid in this tax year to £553 billion paid in the tax year just starting, an increase of £36 billion. Then in each year for the next four years, the tax take is due to increase by £32 billion.

Helen Goodman: I am puzzled by what the hon. Gentleman is saying. I thought it was the policy of Conservative Members to share the proceeds of growth between tax reductions and increased public expenditure. How can the proceeds of growth be shared unless there is some increase?

Charles Walker: I am happy to deal with that, but I am not speaking for my party. I am speaking as a very junior Member of Parliament for Broxbourne who is speaking because he feels passionate about the subject, and because he cares about alleviating the circumstances of the very poorest in society. Again, I will not be drawn into a partisan exchange.
	The cost of reducing taxes by £8.4 billion a year is significant, but it would be substantially offset by higher rates of economic activity, with people choosing to take jobs and working longer. As people go back to work and increase their earnings, there will be savings in the £20 billion currently spent on tax credits, plus the other £100-odd billion spent on other benefits. The £42 billion could quite easily be found if we did not spend the £36 billion that the Government have earmarked for unpopular ID cards and the failing NHS IT records system.
	I would be more than happy to have a debate on how we fund the future alleviation of high levels of taxation. I, as a Conservative—in answer to the question from the hon. Member for Bishop Auckland (Helen Goodman)—might like to fund it by getting rid of schemes that I do not think will deliver benefit to the taxpayer, or, yes, partly fund it by slowing the growth of the state, or yes, partly fund it by a reduction of the tax benefits and benefits that we pay out.
	I know that Labour Members are concerned that many people on low incomes are paying tax and they might argue, as the hon. Member for Luton, North (Kelvin Hopkins) did, that the taxes of the very richest should go up. Let us have the debate. We cannot live in a sterile political world where we are afraid to talk about things that matter to the many millions of people out there in the community. We have an obligation and duty to them.

Brooks Newmark: I do not wish to cause a ruckus in my own party, but I hope my hon. Friend would agree that a core part of our policy is to put stability before tax cuts, and that we cannot achieve the goals that he seeks unless we put stability before tax cuts.

Charles Walker: Of course we want to achieve economic stability, but it is not impossible that a future Government, whether Labour or Conservative, could commit to taking the very poorest people out of tax altogether. We are, after all, elected to run the country and to make hard decisions. I can almost anticipate the Minister's response. He will say that raising tax thresholds, as the hon. Member for Bishop Auckland said, cannot be done because it will benefit the rich. That is not good enough. It is an abrogation of our responsibility to the least well off in society. Raising tax thresholds may benefit the rich, but the marginal benefit to the very poorest in society will be far greater.

Edward Balls: I do not wish to make a partisan point. In the spirit of the hon. Gentleman's comments, I say to him that if he keeps the minimum wage at its current level, abolishes the tax credit for single parents and uses the money instead to raise the personal allowance, a single parent will be significantly worse off by many hundreds of pounds. Does he accept that fact?

Charles Walker: We can assist single parents through universal child benefit. I point out to the Minister that the Joseph Rowntree Foundation said in recent evidence to the Scottish Affairs Committee that tax credits may be useful for single parents, but they keep many married couples and cohabiting couples in poverty. That is worth thinking about. I can send him that evidence if he wishes to double-check it.
	Yes, I agree that cutting taxes or raising thresholds may benefit high earners, but as I said, the marginal impact of raising tax thresholds will be felt far more keenly by hard-working families at the bottom end of the income scale. The purpose is not just to give people back money. It is to give them back their self-respect and to reduce the role of the state in their lives.
	Who would benefit from Charles Walker's proposal from Broxbourne? People who want to work, people in work—despite what the Minister says, both single people and married people—families and pensioners, all worthy recipients of a tax cut allowing them to keep more of the income that they earn. Who would not benefit? The overbearing state would not benefit, and the poverty industry would not benefit if we took measures that genuinely alleviated poverty and restored self-respect to people and to families.

Brooks Newmark: I draw hon. Members' attention to my entry in the Register of Members' Interests.
	In 1998, the Chancellor proposed a code of fiscal stability so that the Government would adhere to the principles of transparency, stability, responsibility, efficiency and fairness. The reality in 2007 is that he has given us another Budget so opaque that a cut in the basic rate of income tax will actually leave some of our poorest families worse off.
	After the Budget, the Chancellor told Radio 4:
	"It wasn't a short-term giveaway",
	and he certainly got that right. Before he entered office, he said:
	"I want the next Labour Government to achieve what in 50 years of the Welfare State has never been achieved. The end of the means test for our elderly people."
	Last week, however, he gave us a Budget that will drag even more of the most vulnerable people in our society into his means-tested credits fiasco.
	With his 11th Budget, the Chancellor has shown once again that he is the true heir to Blair—all spin and no delivery. He has failed to deliver a balanced Budget—by "balanced", I mean letting the House and the public know that while he was giving with one hand, he was taking with the other. It should therefore come as no surprise that no one believes a word he has said. The Chancellor should reflect on the following day's headlines: one paper went with, "Tax cut: It's just a big con"; another went with, "Brown tax cut trick"; and a third used, "What Gord giveth, Gord taketh away". In less than 24 hours, the Chancellor went from tax cutter to tax con.
	The heart of the debate concerns the environment and environmental taxation. Office for National Statistics data show that the proportion of total taxation composed of environmental taxes has fallen from 9.8 per cent. in 1999 to 7.7 per cent. in 2005. The Chancellor told the Treasury Committee in December that there were five strands to the Government's policy on tackling climate change, and I want to go through each of them. The first strand is science and innovation, but the reality is that innovation schemes, such as the Peterhead DF1 carbon capture project, have stalled while the private sector waits for the Government to catch up.
	The second strand is market mechanisms such as carbon trading. Page 173 of the Red Book claims that
	"a strong lead from the UK"
	has helped the EU's carbon trading scheme, but the Environmental Audit Committee recently found that
	"the emissions projections appear to have been inaccurate and inflated, and the national caps derived from them too unambitious".
	That is hardly an unqualified success.
	The third strand is encouraging personal and social responsibility. Airline passenger duty is typical of the Chancellor's delight in raising stealth taxation from the environment. The money raised is not actually reinvested in the environment, and, as I said in my interventions, it does nothing to change the public's behaviour. However, I noted with interest that my hon. Friend the shadow Chancellor mentioned in his response to the Budget a letter from the Secretary of State for Environment, Food and Rural Affairs entitled, "DEFRA's priorities for the Budget of 2007", in which the Secretary of State noted that
	"there is a case to look again at making domestic flights subject to VAT."
	When questioned earlier in the debate, the Secretary of State seemed to throw in the towel, but I am delighted that he shares the view of my right hon. Friend the Member for Witney (Mr. Cameron) that the polluter must pay. More is the pity that the Chancellor went out of his way to attack my right hon. Friend's submission during the Budget debate.
	The fourth strand concerns public investment in environmental efficiency. I welcome grants for pensioners to install insulation and central heating, as well as reductions in VAT on energy saving and environmentally friendly products. Conservative-led Braintree council has shown the Chancellor the way ahead for some years by offering council tax rebates in return for investment in cavity wall insulation, so the Chancellor's measures are hardly ahead of the curve.
	The fifth strand concerns tax incentives and tax reliefs. The stamp duty exemption for carbon-free homes might be a step in the right direction, but the website smarthomes.com states that there are currently 27 zero-carbon homes in the UK, so there is clearly a long way to go before the relief is actually useful. Furthermore, as I said in my interventions, the increase in vehicle excise duty does nothing to control usage. Vehicle excise duty is a tax on ownership, not on mileage or usage. Instead of having a policy driven by the polluter pays principle, the Chancellor views the environment as another vehicle for stealth taxes.
	I should like to move on to public sector debt, which is a particular interest of mine. In 1997, the Chancellor's pre-Budget report statement promised:
	"We shall legislate so that there is a duty on Government to report to Parliament on how they are meeting their fiscal rules; in that way, everyone can plan for the future on a much clearer and better informed basis."—[ Official Report, 25 November 1997; Vol. 301, c. 774.]
	Table C4 on page 278 of the Red Book shows public sector net debt reaching half a trillion pounds, but that figure is dwarfed by potential off-balance-sheet liabilities, such as the private finance initiative and public sector pension liabilities, which push public sector net debt to well over £1.3 trillion. That represents nearly £2 off balance sheet for every £1 on balance sheet. The only way to find out the extent of public sector pension liability is for us to keep asking parliamentary questions. So much for our being clear and better informed about things. The Chancellor's creative accounting means that he is more like the Enron Chancellor than the Iron Chancellor.
	Despite a steady rise in the tax burden since 2000, successive Budgets have seen the Chancellor borrow £100 billion more than he originally intended. On Wednesday, he admitted that we need to borrow £8 billion more than he said was the case in December—a mere three months ago. Mystic Meg could do a better job of predicting public debt figures than the Chancellor. After his 11 Budgets, Organisation for Economic Co-operation and Development data show that public sector spending accounts for 45.3 per cent. of gross domestic product, while the International Monetary Fund says that the UK has the largest structural deficit in the G8.
	Much has been said about public services, but I want to touch on the theme because it is important. The 1999 Red Book boldly declared that
	"the Government does not pass on the costs of services consumed today to the taxpayers of the future—each generation is expected to meet the current costs of the public services from which they benefit."
	In 2001, in another red book,  The Sun, he was quoted as saying that
	"any additional resources must be matched by reforms so that we get the best value for money. There is not to be one penny more until we get the changes."
	Yet again, there is nothing in this Budget about public sector reform. Richard Lambert, the director general of the CBI, has said:
	"The skill levels of many young people leaving secondary school remain poor despite almost a decade of rising investment in schools. Basic skills remain a real weak point of the UK economy."
	Page 139 of this year's Red Book shows that education spending growth is set to halve to 2.5 per cent.—that is below the growth rate of the economy—despite a Labour party pledge in its 2005 manifesto:
	"We will continue to raise the share of national income devoted to education."
	Furthermore, the Chancellor's silence on the national health service speaks volumes, given that nurses' jobs are being axed, junior doctors are on the march and community hospitals are being closed—in some cases, they are not even being built. My Braintree constituents were promised such a hospital. I welcome the fact that almost twice as much money has been spent on the NHS since 1997, but there has been no equivalent improvement in productivity, so it is not surprising that the public are asking where all the money has gone.
	During the past couple of days, we have heard much about business taxation and competitiveness. The issue is important for our business community. The corporate tax rate change is forecast to lose the Treasury some £1.38 billion in the fiscal year 2008-09. However, I am led to believe that changes to tax relief on capital expenditure should net £1.49 billion more in the same year. Of the £985 million that the Chancellor is clawing back through the corporate tax system, £820 million will come from small businesses. The bottom line for business is that total business taxes will raise almost £3 billion extra over the next two years.
	Professor Peter Spencer, economic adviser to Ernst and Young's ITEM club, summed up the Budget's effect on business:
	"It is a con trick, there's no doubt about it. I'll be amazed if people are duped by it for more than five minutes."
	David Frost, director general of the British Chambers of Commerce, was concerned about the "long-term damage" to small business:
	"As the Chancellor champions enterprise and acknowledges the importance of small business to the UK economy, many of our members will feel let down".
	At the time of his 1998 Budget, the Chancellor proclaimed:
	"This is a Government which does not simply talk about cutting the cost of bureaucracy and red tape but takes the decisive action necessary to achieve it."
	Then perhaps the Economic Secretary can explain why  Tolley's Tax Guide has grown from 5,952 pages in 2001 to almost 10,200 pages in 2007. The bottom line is that the Chancellor has shown that he knows nothing at all about wealth creation and those who create the wealth for our country.
	Moving on to rising personal taxation, the total tax take is up by more than 100 per cent., from £287 billion in 1997 to £586 billion in 2008, rising to a whopping £682 billion in 2011. Table C9 on page 285 of the Red Book indicates that we now have the highest tax burden on record. The Institute for Fiscal Studies has found that up to 3.5 million families will be worse off. How does that square with the Chancellor's statement that the purpose of this year's Budget is to ensure that working families are better off? Furthermore, the families and individuals most affected are some of the poorest—those earning under £18,000. I thought that I would see the Economic Secretary perk up at this stage and point out that the Chancellor would say in reply, as he told the BBC:
	"For people who are low earners the tax credit wipes out the income liability and that's why lower income workers are better off now as a result of what we have done as a Government."
	But tax credits are not tax cuts.
	I therefore turn to tax credits. The most recent figures from the Treasury for the tax year 2004-05 show that nearly £4 billion in working tax credits and child tax credits went unclaimed. Robin Williamson, technical director of the Low Incomes Tax Reform Group, said:
	"There are plenty of reasons why people don't claim tax credits. Some people do not know they are entitled to claim, while others are put off by hearing about other people's bad experiences.
	Those who do take the plunge face a 12-page form and a 60-page explanatory note that might even challenge the hon. Member for Wolverhampton, South-West (Rob Marris), were he here. That may have something to do with the problem. It should not be at all surprising that four out of 10 people end up not claiming their entitlements. Surely the Economic Secretary must recognise that this is a problem. With 3 million out of 5 million people either receiving overpayments or underpayments, I wonder whether he would agree with the hon. Member for Newcastle upon Tyne, Central (Jim Cousins), who said in the Treasury Sub-Committee that such widespread
	"under or overpayments of tax credits is a shocking, devastating damage to the whole welfare reform policy."
	Although I welcome the increase in capital allowance for pensioners, it is disappointing that the Chancellor has, once again, preferred means-testing to index-linking pensions. Gordon Lishman, director general of Age Concern, said:
	"Without quick intervention, the real value of the basic state pension will fall to a pitiful £75 by 2012 and today's pensioners will fail to benefit from any of the good measures proposed in the Pensions Bill."
	Mervyn Kohler, head of public affairs at Help the Aged, said:
	"This Budget was a missed opportunity to address the wider needs of our pensioner population."
	I am sorry that the Secretary of State for Environment, Food and Rural Affairs is not present, because I should like to ask him whether, following last week's Budget, he would change the prediction that he recently offered on BBC's "Question Time" that
	"when I come back on this programme in six months' or a year's time, people will be saying, 'Wouldn't it be great to have that Blair back because we can't stand that Gordon Brown?'"
	Or does he agree with the shadow Chancellor's remarks on Thursday that:
	"With his last Budget, the Chancellor has shown us that he cannot be the change the country wants—that he is part of the problem, not part of the solution... if people... want... to restore trust in the political process, we do not just need a change of Prime Minister—we need a change of Government"?—[ Official Report, 22 March 2007; Vol. 458, c. 971.]

Stephen Crabb: I apologise for not being present for the whole debate. I was chairing a meeting of the Conservative party's human rights commission.
	Many hon. Members with an interest in energy policy and environmental policy would have welcomed the reference in the Budget to the announcement on the same day by the Secretary of State for Trade and Industry of the competition that will be launched for going ahead with Britain's first full-scale carbon capture and storage demonstration project. The UK, with its history of being a coal producer and a key oil and gas producer, is especially well placed to lead the world in developing carbon capture and storage technology. We also have a world-class skills base in geo-engineering, which makes Britain uniquely well placed to take advantage of the emerging technology.
	Let me inject a few words of caution into the proceedings. As my hon. Friend the Member for Braintree (Mr. Newmark) said, a pretty large subsidy is required to make the full-scale demonstration project a success. The private sector on its own will not fund a full-scale carbon capture and storage project. I understand that the Department of Trade and Industry has made available some capital grants to support demonstrations of capture-ready plant and CO2 storage. However, it has always been acknowledged that a full-scale demonstration of the complete CCS chain would require a much larger financial support package from the Treasury.
	The Science and Technology Committee in its report on CCS referred to such a package as being of the order of hundreds of millions of pounds. The Government, in their response to the report, did not dispute the figure, stating:
	"the scale of support that might be required from taxpayers and/or consumers is very large".
	Unless I missed something in the Budget, I do not recall any announcement of specific funding to help a full-scale CCS project come into being. We must watch this space closely to ascertain whether the funding gap will be closed to an extent that enables a full-scale demonstration project.

Brooks Newmark: Is not another ancillary benefit of CCS that we have more than 200 years' supply of coal in the UK? Would not it be good to try to revive our coal industry so that we are secure in our energy supplies?

Stephen Crabb: I welcome my hon. Friend's intervention, but I am more sceptical about whether CCS will enable a revitalisation of the UK domestic coal industry. I shall deal with that later.

Charles Walker: Will my hon. Friend explain to the uninitiated the mechanics of carbon capture? Is it captured and put into a substrate of porous stone or is it solidified?

Stephen Crabb: My layman's understanding is that it is not solidified, but injected back into porous rock, and I gather that disused North sea oil and gas fields are particularly well suited geologically for that sort of use.
	Secondly, the emphasis on this being a demonstration project is exactly right. Specifically, it is a demonstration project that can be applied in an overseas context where new coal-fired power stations are being built at a tremendous pace. I think that hon. Members who believe that CCS somehow throws a new lifeline to the domestic coal industry may be disappointed. Some Members believe that the domestic coal industry offers one solution to our energy security challenges in the decades ahead, but I beg to differ. Coal has an important part to play in the energy mix and will continue to be significant for several decades to come, but it will be increasingly foreign coal rather than domestically produced coal that keeps—

Nicholas Winterton: I am slightly surprised at my hon. Friend's argument. Does he not believe that there is huge potential in clean coal technology, in which the UK actually leads the way? Surely it could enable us to utilise the 300-plus years' stock of coal in this country. Will he speculate about investment in biofuels, which generate far fewer emissions into the environment? Should not the Government proceed in that way rather than penalising people as they are currently doing through the taxation system?

Stephen Crabb: I agree with my hon. Friend that incentivising new environmental technology perhaps represents a better way forward for tackling carbon emissions than reliance on blunt green taxes. I regard biofuels as an exciting development in the field of environmental technology. In my constituency, a planning application will shortly be made by a large Irish company to develop a large biofuels plant at the port of Milford Haven—one of the UK's leading energy ports, as my hon. Friend will be aware. It has specialised in oil refining, but liquefied natural gas terminals will be coming on stream at the end of this year. Now added to the mix will be a biofuels plant, which is an exciting development as well.
	Returning to coal, it will be increasingly foreign rather than domestically produced coal that will keep the UK's coal-fired generating capacity burning. There are many reasons why domestic coal production will continue to decline, but they are quite unrelated to demand. Indeed, during last winter, which saw a significant upswing in demand for coal as gas prices spiked, the additional demand was met entirely by imports rather than any increase in domestic supply. I believe that our coal will come increasingly from Russia, South Africa, Australia and south America. To my mind, that creates the conditions for enhanced energy security rather than a return to reliance on domestic coal production. Hon. Members should not forget that the only time that the lights went out in the UK's recent history was when we relied almost entirely on domestic coal.

Charles Walker: Given the need to reduce this country's carbon emissions and the fact that clean coal technology may or may not be viable in the short to medium term, does my hon. Friend see a role for expanding our nuclear generation in the next five, 10 or 15 years?

Stephen Crabb: My belief is that in future decades we are going to need a basket of different energy supplies. I reject the football supporter approach whereby we have to be in favour of nuclear or coal or biofuels when the truth is that the UK is going to need a whole different spread of energy sources in the decades ahead. My belief is that nuclear will still feature in the mix, though it may have less of a share than it does now.
	Returning to carbon capture and storage, which was referred to in the Chancellor's Budget statement, it is not clear to me what contribution CCS can make to cleaning up the UK's coal-fired power stations. The Science and Technology Committee produced an excellent report on this subject in February last year, in which it noted that there were significant technical difficulties associated with retrofitting capture technology on to Britain's ageing fleet of coal-fired stations. Even if those difficulties could be overcome, it might not be economically viable to do so.
	The value of the CCS demonstration project surely lies in its application overseas, particularly in countries such as India and China, which are adding huge amounts of coal-fired generating capacity each month. At the beginning of February, I was in India and saw a news report in the  Hindustan Times, which referred to the previous day's announcement by the Indian Prime Minister that India will need 56,000 MW of coal-fired generating capacity just for the next five years. Given the lifetime of those coal-fired plants and the associated carbon emissions, it is clear that countries such as Brazil, India and China—without downplaying the moral obligation on this country to do its bit to tackle climate change—are where the serious potential lies for cutting carbon emissions. The focus of the UK's demonstration project must surely be on showing how it can work across different countries with different electricity-generating systems.
	Like other environmental technologies, carbon capture and storage represents a significant export opportunity for the UK. As I have said, the UK is a world leader in geosciences and the oil and gas sectors, and there is no reason why that expertise cannot be extended to carbon capture and storage so that it becomes an export opportunity. The barrier to that lies less in the technical skills involved in the process than in our abilities as an exporting nation. In the remainder of my contribution, I should like to focus on trade and exports.
	Exports are an extremely important component of GDP growth. Those of us who have been concerned about the over-reliance in recent years on household consumption as a driver of GDP growth believe that exports have not been sufficiently strong. In comparison with other Organisation for Economic Co-operation and Development competitors, our export performance is simply not good enough. The UK has a smaller share of total world exports than many of its key competitors, with the exception of Italy. In the export of goods alone, the UK lags well behind Italy. In part, that reflects the UK economy's specialisation in services, which make up a small percentage of total global trade, but we should not hide behind that argument to excuse our poor performance as an exporter.
	For example, if we read across from the UK figures to the German figures for exports in the past 10 years, we will see immediately that Germany is competing as an export nation in the new globalised world far better than we are. When our exports were flat between 2001 and 2003, Germany posted increases of 7 per cent., 4 per cent. and 3 per cent. While the export growth rates registered by the UK in the past two years have been much more impressive, we now know that soaring VAT fraud had the effect of inflating those figures. Professor Peter Spencer, chief economic adviser to the ITEM Club, noted:
	"It appears that the recent revival in UK exports largely reflects the activities of fraudsters rather than genuine business. When seen against the background of the boom in world markets, it's actually very disappointing."
	In this year's Budget statement, the Chancellor forecast growth and exports of 5.5 per cent. and 5 per cent. going down to 4.5 per cent. in three years' time. Those figures are hardly stellar or ambitious. In last year's statement, he had rather more to say about foreign trade. He seemed to be on the verge of announcing a major new Government initiative for boosting our trade with key industrialising nations such as India and China. He said:
	"Alongside a new City of London taskforce to promote British financial services globally, and backed by a new British advisory board and council, the Foreign Secretary and the Secretary of State for Trade and Industry are announcing a revamped UK Trade and Investment, which will set new targets for expanding trade with China, India and emerging economies, and for making Britain the location of choice for international business."—[ Official Report, 22 March 2006; Vol. 444, c. 291.]
	That all sounded great, and a number of right hon. and hon. Members, and many UK business organisations, have made the case for a number of years for a concerted effort by the DTI and Foreign Office to help UK exporters take advantage of the huge investment and trade opportunities on offer in places such as China and India. For some time, concern has been growing that the UK is not capturing a large enough share of that huge increase in international trade.

Nicholas Winterton: My hon. Friend may or may not be aware of my long-standing interest in manufacturing, which, in my view, is the only source of long-term, sustainable, non-inflationary economic growth. How does he respond to the fact that manufacturing jobs in this country are being lost at a rapid rate? How can we capture opportunities overseas other than in financial services, in which we are highly qualified, if our manufacturing base is shrinking year by year because it is less competitive? The chief executive of a major pharmaceutical company told me that we are one of the least attractive countries in which to invest. Ireland and the Netherlands are far more attractive in that regard.

Stephen Crabb: My hon. Friend is exactly right. A key component of the great narrative around the 10 years in which the Chancellor has been in place is the consistent erosion of the UK's competitive position. My hon. Friend talked about the loss of manufacturing jobs. He will be aware that, back home in Wales, the loss of a great many high-quality manufacturing jobs in the past year or two has been hugely sad. Excellent companies, some of which came to Wales in the 1980s because they were attracted by the UK's competitive position, are now vacating the country.
	My hon. Friend rightly talked about the loss of this country's competitiveness. It has been amusing to see the number of Labour Welsh Assembly Members and MPs who have been tripping over themselves to have their photographs taken outside the Burberry manufacturing plant in Treorchy, which has, sadly, announced that it is shutting down. Anyone who has grown up in a household in which there is worklessness will know just what a tragedy that is. We feel for the workers who have been made redundant, but if those Labour politicians were serious about protecting those jobs and were genuinely concerned about the future of manufacturing workers in south Wales, they would not be issuing press releases accusing Burberry of corporate greed, but be getting into the Chancellor's face and talking to him about the erosion of our skills base and of our competitive position as a manufacturing economy.

Brooks Newmark: Is not it key that those who seek employment in this country have a good education? One of the tragedies of the Budget is that the growth of spending on education is being slashed in half, to 2.5 per cent. We have heard much from the Chancellor about how he wants to spur on science and technology, but if he does not invest in education, we will not be able to produce employable people.

Stephen Crabb: My hon. Friend is exactly right. The key to success in a globalised world is to have innovation, a skills base and investment in an education system that will help the country to stay competitive in the years ahead, especially at a time when countries such as India and China are pouring out tens of thousands of extremely well-motivated, highly educated engineers and scientists.

Brooks Newmark: My hon. Friend makes an excellent point. I am a member of the Select Committee on Science and Technology. We have some brilliant scientists in this country, but, unfortunately, the interest of students in our primary and secondary schools in being scientists or going into jobs in which science is applicable is declining. That problem is compounded by the closure of chemistry departments in universities such as Exeter. We should be asking what the Government are doing to stimulate interest in the sciences and to support science in our great universities.

Stephen Crabb: That is an excellent intervention. In Wales, sadly, the chemistry department of Swansea university has also closed. A big concern of the Royal Society of Chemistry is the number of hours of science teaching in schools that is being done by teachers who have no science degree. As a result, the subjects are not interesting and are not being taught from a well-informed position. That is leading to a lack of interest at A-level and feeding through to the decline in demand at university level, thus making it difficult to maintain and make viable expensive university science departments.

Greg Hands: Will my hon. Friend say a little about language learning? He and I share something in common: we are both married to people from other EU countries who do not have English as a first language. The learning of languages in our schools is crucial as well.

Stephen Crabb: That is a good point. A view that had currency some years ago held that, in a globalising world, English being the language of business and the language of Microsoft, there was no reason for English speakers like ourselves to learn a foreign language. In fact, the reverse is true: in a globalising world it becomes even more important for us to show that we are culturally sensitive and can communicate in indigenous languages in the countries with which we hope to trade and do business.
	In last year's Budget statement, the Chancellor spoke of new targets for expanding trade with countries such as China and India. All that sounded great. For a long time, Members of Parliament had made the case for a concerted effort on the part of Government to help United Kingdom exporters take advantage of the increasing opportunities in major industrialising markets such as China and India. That was expressed very well by the director general of the British Chambers of Commerce in a 2005 interview with one of the Department for Trade and Industry's in-house publications. He said:
	"One real concern is that there is too much focus on Europe . . . Europe is a market that is essentially stagnant. We've got to get where the action is, and at the moment that's on the other side of the globe".
	He was talking about China and India, and also about the United States. The Confederation of British Industry has been making similar points for years, and last year the Select Committee on Trade and Industry did so as well in an excellent report on trade with India.
	We look forward to further information from trade Ministers, the Foreign Office and the Treasury about the flesh that they will put on the bones of the new strategy to improve trade with China and India, for I think there is agreement on both sides of the House that we want British companies to do well in a globalised world.

Simon Burns: Those who remember, not even a week ago, the praise of Labour Back Benchers when the Chancellor sat down will find it rather odd that today—apart from the hon. Member for Newport, West (Paul Flynn), who wandered in from the cold a few minutes ago—the Labour Back Benches have been completely empty. I can only assume that after the reality of the Chancellor's Budget had sunk in, Labour Members were ashamed and nervous of the reaction of the country out there, and could not face coming here to take part in today's debate.
	It was interesting that, while the parliamentary theatre of the last minute or two of the Budget statement may have played well with the Back Benches of the governing party, it was my hon. Friend the Member for Tatton (Mr. Osborne), the shadow Chancellor, who so quickly and eloquently exposed the Budget for what it was: a massive con trick. It was interesting because there is an adage in politics that those who cheer loudest on the day of the Budget wake up next morning with the greatest regret. That is what happened on the morning after this Budget, when the opportunity arose to think about all the things that the Chancellor had not said—all the nasty little items that were included in the press releases. We have come to learn from this Chancellor that a relatively brief Budget speech—in parliamentary terms—can omit a multitude of nasty items that are hidden away in Treasury and HMRC press releases; and last week's Budget was no exception.
	What most people were mentioning to me in my constituency this weekend was the con of the 2p cut in income tax, presented with a flourish by the Chancellor as if it were part of a massive tax-cutting agenda but offset by the abolition of the 10 per cent. tax rate. That is an insult. What it does—and irony upon ironies, a Labour Government are doing it—is make the poorest in society, who will lose the most from the abolition of the 10 per cent. rate, subsidise tax cuts for people who are better off. That almost amounts to a contradiction in terms. It takes the biscuit that that has been done by this Chancellor of all people. He has said so much, but although he talks the talk he does not walk the walk, except to inflict damage on those people in society who can least afford it. Those people should be getting help, not the more wealthy people at the expense of the poorer members of society.

Brooks Newmark: Does my hon. Friend agree that the problem that he rightly addresses is compounded by the fact that the tax credit system is not only a shambles but that the people who have to fill in the forms do not understand them, so that up to 40 per cent. of people do not even claim their entitlements?

Simon Burns: My hon. Friend identifies a significant problem. Not only do such people not understand because the system and the forms that they have to fill in are so complicated, but when the Government overpay them they add insult to injury by seeking to claw back all the overpayment and saying that despite the complexities in the system people should have been able to identify at the time that something was wrong with the payments they were receiving.  [Interruption.] As my hon. Friend the Member for Northampton, South (Mr. Binley) says, that is shameful. It also imposes a severe burden on people who thought they were getting the right sums in tax credits and who now find that they face significant penalties in respect of the repayments that the Government are hell-bent on taking back from them. That is causing considerable hardship. Those of them who are working and paying the 10 per cent. rate in tax will have the double-whammy of having that withdrawn from them when the 2p tax cut comes into force, so they will face an additional financial hardship that will leave them less well off than they are at present.

Graham Stuart: I wonder whether my hon. Friend has cases in his constituency that are similar to far too many that I have in mine. Many disabled people have difficulties with the system by which they have to claim benefits, which involves telephone call centres. A constituent of mine with hearing difficulties had to depend on a telephone call centre and failed to get the moneys required, and in another case the council started to take action for fraud against a disabled constituent of mine who had had a stroke and who had difficulty speaking, which took him to the brink of suicide. That is the situation that we are in with these tax credits, which are neither just nor fair.

Simon Burns: My hon. Friend highlights a significant problem that many Members in all parts of the House deal with in their constituencies. Through no fault of their own, the most vulnerable and weakest people in society are facing hardships that the state is inflicting on them through an inflexible bureaucracy.

Nicholas Winterton: May I ask my hon. Friend to comment on the following question? Why should the Government set up an expensive, incompetent bureaucracy to pay back to people money that should never have been taken from them in the first place?

Simon Burns: In his own robust way, my hon. Friend makes an extremely telling point. That has baffled all of us for too long, yet the Government are not prepared to acknowledge the problems that have been identified and to take action to remedy them.
	Another problem that I have is the lack of any meaningful mention in the Chancellor's speech of the national health service. It is the elephant in the room. As all Members have problems in their constituencies with the national health service, it is extraordinary that the Chancellor said nothing specifically about it during his Budget speech. The problem is so great—this is interesting in terms of the concept of collective responsibility—that Ministers demonstrate in the streets in their constituencies against measures that have been taken within the health service in their local communities that are a direct result of Government actions.
	The Under-Secretary of State for Health, the hon. Member for Bury, South (Mr. Lewis), campaigned against the closure of a maternity unit in his constituency, when he is the very Minister responsible for maternity services. The Government's Chief Whip demonstrated in her constituency, as did the Labour party chairman, who is a member of the Cabinet. One would have thought that at the beginning or end of a Cabinet meeting, or even during, she could have passed a note to the Secretary of State for Health to see what could be done, but no. The only redress that that Cabinet Minister has is to demonstrate in the streets against the very policy that her own Government are implementing. We have been reduced to an extraordinary system: the only way in which Ministers can try to change Government policy, even when they are in the Department responsible for it, is by demonstrating in the streets.
	The Chancellor should have done something with the record increases that he has put into the health service over the past six or seven years. It would be foolish to deny that that has happened, and I, for one, am more than happy that the Government have made that extra money available to the health service. However, what is causing problems for my constituents and for people who work in the health service is that the money is not reaching front-line services in the expected amounts, as a proportion of the extra money being made available.

Stewart Jackson: Is my hon. Friend aware that the Select Committee on Health last week branded work force planning in the national health service under this Labour Government as a disastrous failure, saying that millions of pounds have been wasted training doctors and nurses for jobs that do not exist? Only Labour could deliver such a laughably incompetent result.

Simon Burns: My hon. Friend makes a telling point but I must disappoint him, because when the Government, through the Department of Health, respond to that report, the Secretary of State for Health will, in her amicable way, tell us that everything is fine in the health service. In fact, if we remember correctly, last year was the best year ever. If last year was the best ever, with closures, compulsory and voluntary redundancies, drug bill problems and delayed operations, heaven help us when there is merely a good year. The money that the Budget has provided over the past seven years is not reaching front-line services in the amounts that it should.
	The Chancellor should have told the country what he and the Government were going to do to ensure better value from health service money, and to ensure a tightening up, so that the health service has strict and proper management. The service is so large and has so many employees—there are more than 1 million of them—that one needs a strong management, not a bloated bureaucracy. Unfortunately, in too many areas of the health service, there is a bloated bureaucracy and waste and inefficiency. The way in which the national health service property made available to patients is looked after leads to waste, as does the manner in which drugs are prescribed. All those areas need tightening up, so that the money is directed where it should be—to front-line services.
	That is why the Budget that the Chancellor delivered last week—the last that he will deliver—was a wasted opportunity and a con trick on the British people. They do not like being conned, and it is quite plain that they have seen through the Chancellor's smoke-and-mirrors exercise and recognised it for the con that it is. Given that he is never wrong, if and when he moves next door to No. 10, he will have the consolation of there being someone else at No.11 whom he can blame when the economy fails to respond to all— [Interruption.] I do not think it will be the Economic Secretary—that would be a step too far at this stage in his career—but I wish him well. The fact is that it was a wasted opportunity and it was a con trick on the British people. They have seen through it, and they have seen through this rotten Government for what they are.

Mark Hoban: It is difficult to know how to follow that virtuoso performance from my hon. Friend the Member for West Chelmsford (Mr. Burns).
	When preparing for the debate, I studied the Economic Secretary's form, and I found a book, "Reforming Britain's Financial and Economic Policy: Towards Greater Economic Stability", edited by the hon. Gentleman and the former permanent secretary to the Treasury, Gus O'Donnell—probably the only former permanent secretary who is still speaking to the Chancellor. When I checked Amazon yesterday, I found that it is not one of its most popular books—it is ranked at No. 77,287 in Amazon's list of bestsellers— [ Laughter.] Members should not mock because it is a better seller than the companion volume, snappily titled, "Microeconomic Reform in Britain: Delivering Opportunities for All."

Edward Balls: A fascinating publication.

Mark Hoban: The hon. Gentleman said it. That came in 304,974th, but it was streets ahead of the third work he has authored, this time with the Financial Secretary to the Treasury— [Interruption.] They are all on Amazon. The pamphlet was entitled, "Towards a new Regional Policy"—

Edward Balls: That one was free.

Mark Hoban: So why on earth does it rank 1,465,145th in Amazon's bestseller list? The Economic Secretary may feel that he is the Harry Potter of the Treasury, but he is certainly not the J.K. Rowling of economics.
	I urge Labour Back Benchers, few as they are, not to go out to buy that book because it needs a rewrite. The first rewrite is to make sure that Economic Secretary writes a full defence of the third fiscal rule—the one the Chancellor announced on Wednesday. Having told us for months that he rejected our policy of sharing the proceeds of growth, the Chancellor announced on Wednesday that he would adopt it, so over the next spending review period, Government spending will grow at a slower rate than the economy as a whole— yet another Conservative policy adopted by the Chancellor.
	Typically, the Chancellor has not even told his close colleagues about that change in policy. Even his campaign manager, the Leader of the House and the hot tip to become the Economic Secretary's new boss, did not know about the third fiscal rule because yesterday he managed to launch an attack on it during his interview with Andrew Marr. No one should be surprised that the Chancellor did not tell anyone about it because, as Andrew Turnbull said:
	"There has been the absolute ruthlessness with which Gordon has played the denial of information as an instrument of power."
	That is not the only rewrite required in the book. Let me read out a couple of extracts from the section entitled, "Maximum transparency for credibility", a title which, after 11 Budgets, catches the hubris of the Chancellor and his sidekicks. On page 39, it states that
	"the suspicion that the government is manipulating information or policy for short term motives is as damaging to credibility and the economy as evidence that it has done so.
	As the Budget was analysed, it became apparent that there was both suspicion and evidence that policy was being manipulated for one, single short-term motive: the Chancellor's coronation as Labour leader.
	Let me read out another passage from the same book:
	"Recent history shows that credibility of macroeconomic policy making is a valuable commodity—once promises on tax, borrowing or interest rates are broken it is hard to rebuild credibility in future promises."
	How right that is. In each of the last seven Budgets, the Chancellor has had to revise upwards his borrowing forecasts. As for tax, the Chancellor lost his credibility many Budgets ago. There is more where that comes from in the book, so perhaps it is time for the Economic Secretary to rewrite his book and to admit the mistakes of the past 11 Budgets. Perhaps then he will have a bestseller on his hands.
	Let me turn to today's debate. Only four Labour MPs from the Back Benches participated in the debate and only two of them actually voiced their support— one of them could not stomach being here at the end and one of them arrived half-way through. On the Opposition Benches there were eight speakers. Let me turn to some of the comments that were made.
	The Chancellor has been likened to Stalin in the last week, but the right hon. Member for Oldham, West and Royton (Mr. Meacher) was certainly the voice of old-fashioned socialism. He made the point that politics prevailed over social justice in this debate. He accepted, as I think that most people on both sides of the House accept, that there had been problems with tax credits. He then argued that the inequality of the 1930s and the Edwardian era was returning and that the politics of the Government contributed to that. Given his attack on the Government and their record, it is amazing that he managed to be a Minister in that Government from 1997 to 2003.
	The hon. Member for Eastleigh (Chris Huhne), who is not in his place, recognised, as we do, that the share of tax from green taxes has fallen since 1997. He also supported the argument that there is popular support for green taxes as replacement taxes, but not, as the Chancellor has used them, as stealth taxes.
	The hon. Member for Islington, South and Finsbury (Emily Thornberry), who has apologised for not being here for the winding-up speeches, talked about history. She said that, in the past, Departments were dependent upon being in favour with the Prime Minister for their funding, but now their funding clearly depends on whether they are in favour with the Chancellor. We saw what happened to the Home Office budget when the right hon. Member for Norwich, South (Mr. Clarke) was Home Secretary. It was frozen in real terms for the duration of the next comprehensive spending review. As many colleagues on the Opposition Benches have pointed out, there has been barely a mention of the NHS in two Budgets and one pre-Budget report, so clearly the Secretary of State for Health has fallen out of favour with the Chancellor.
	My hon. Friend the Member for Mid-Worcestershire (Peter Luff), a distinguished Chairman of the Trade and Industry Committee, explained exactly why the Budget had such a short-lived good press. He said quite clearly that the Chancellor has tried to fool people in this country too often. People expect the damage to be hidden in the small print and have woken up very quickly to the reality of the Budget. He rightly pointed out that in the pre-Budget report, taxes on businesses had gone up by £2.5 billion.
	The hon. Member for Luton, North (Kelvin Hopkins)—another Member not in his place—echoed the sentiments of the right hon. Member for Oldham, West and Royton. While the right hon. Member for Oldham, West and Royton came out with a list of spending commitments for the Government he aspires to lead, the hon. Member for Luton, North had a comprehensive list of tax increases that he wanted to levy upon us. He said that he was harking back to a golden age of socialism, when Jim Callaghan was Prime Minister and the highest rate of tax was 98p in the pound. He looked back to those days fondly and wistfully. But, like many hon. Members, particularly on the Opposition Benches—although, as my hon. Friend the Member for West Chelmsford indicated in his speech, a number of Members of Her Majesty's Government have also accepted this—he also admitted the impact of cuts affecting health spending in his constituency.
	My hon. Friend the Member for Hammersmith and Fulham (Mr. Hands) referred to that theme in his speech. He talked about the tragedy of boom and bust in the NHS. Ravenscourt Park hospital was opened just four years ago, but was closed this year as a consequence of the taps on spending being turned off. He also eloquently identified the concerns of his constituents who wish to move to a new house, or to buy for the first time, and the barriers to social and labour mobility that stamp duty creates.

Peter Luff: My hon. Friend the Member for Hammersmith and Fulham (Mr. Hands) rightly highlighted the fact that people in the NHS in his area were being made redundant. However, the effect on NHS employees of the cuts in NHS trusts throughout the country where redundancies are not being announced, but job cuts are being made, is just as serious for overall morale in the NHS. In my trust, 700-odd jobs have been lost; mercifully, there have been only about 12 compulsory redundancies. However, the net effect of that on the NHS is just as devastating for nurses, doctors, laboratory technicians and the rest, who have fewer job opportunities as a result of the Government's boom-and-bust policies on the NHS.

Mark Hoban: My hon. Friend is absolutely right. It is interesting that while the Secretary of State for Health will focus on the number of redundancies that are being made, she will not talk about the number of posts that are being lost as a consequence of the changes in spending.
	The hon. Member for Cheltenham (Martin Horwood) accepted, as we do, that the Budget was a tax con, not a tax cut. He pointed out some of the weaknesses in the argument that the effects of scrapping the 10p starting rate of tax would be offset by tax credits.
	The hon. Member for Bishop Auckland (Helen Goodman), who is in the Chamber, spoke about child poverty. I was brought up in Durham, so I know her constituency, and I understand why she speaks passionately about her concerns. However, she must remember that the proportion of young people who are not in employment, education or training has risen since 1997, so the Government have problems in this area. We need to ensure that we focus on tackling both the causes and the symptoms of child poverty throughout the country.
	My hon. Friend the Member for Broxbourne (Mr. Walker) made a contribution to the debate about the alleviation of child poverty and talked about the way in which the tax credit system draws people in. He also cited the bureaucracy and problems of the system. I will take his comments about increasing personal allowances as an early submission for our 2009 Budget.
	My hon. Friend the Member for Braintree (Mr. Newmark) referred to the Chancellor's failings and his failure to produce a full picture of the Budget. He rightly highlighted the fact that green taxes have fallen as a proportion of tax revenue. He spoke about the proud record of Braintree district council on providing incentives for people who wish to improve the insulation of their houses. It was timely that he talked about the off-budget accounting of private finance initiative projects on the day when the Financial Reporting Advisory Board suggested a change to accounting policy to bring more of those projects on to the Government's balance sheet. The challenge for the Government will be whether they apply that policy retrospectively, as well as to future projects.
	My hon. Friend the Member for Preseli Pembrokeshire (Mr. Crabb) launched a debate about the future of coal in a way that he might not have anticipated at the start of his speech. It was important that we had such a debate because it allowed us to hear a range of views about the future role that coal can play. I heard the Economic Secretary say from a sedentary position that the Conservatives had closed the pits, but as the Secretary of State for Environment, Food and Rural Affairs will know from his constituency experience, a Labour Government closed three out of the four pits in South Shields—that fact was pointed out to me when I fought the seat in 1997. As the grandson of a miner and the son of a former colliery electrician, I understand the important role that coal has played in the history of energy generation in this country. I hope that we will find ways to allow it to play a role in the future, too.
	My hon. Friend the Member for West Chelmsford spoke with eloquence and passion about the Budget and the Chancellor's failure to tackle the situation in the NHS. One of the recurrent themes in today's debate has been the question of where the money has gone. As the Government have said time and time again, there has been unprecedented investment in our public services. However, people in our constituencies often see a litany of lost posts, closed hospitals and school standards that are not rising as quickly as they should do, given the amount that has been spent. That fundamental point weaved through the speeches of many of my hon. Friends.
	The clunking fist has hit hardest people on low incomes and the small businesses that are the backbone of the economy. When I was growing up in the Labour heartland of the north-east, I was always told that the Labour party was the workers' party, and that it stood up for those on low wages. On Wednesday, the clunking fist dealt a blow to that reputation. By doubling the tax paid on low incomes from 10p to 20p, the Chancellor made 3.5 million households worse off. A Labour party that boasts about the minimum wage has doubled the tax paid by the people who earn it. Is that what Labour Back Benchers were cheering last Wednesday—a hammer blow to people on low wages? Where are those Back Benchers now to defend the Budget? One thing is certain: I would not like to be a Labour MP defending the Budget on the doorsteps in the run-up to May's elections. How would I justify doubling tax for people on low incomes?
	Many Labour Back Benchers may not have twigged what has happened, but my constituent, Jenny Whiffen, certainly has. She e-mailed me last week, and the Economic Secretary to the Treasury should listen to what she said, because there are many people like Jenny across the country. She said:
	"As a retired person of 61 I am only entitled to a single person's tax allowance and will not be able to claim age related allowances for another 4 years.
	My total gross income for the next year will be £8300. By removing the 10 per cent. tax band I will be paying an additional £200 a year tax."
	She also said:
	"I have seen my standard of living fall as we struggle to pay ever increasing bills for council tax, water rates, rising energy costs...I have also had to start paying for private dental treatment which was something I had never anticipated I would have to do. So much for the promise of National Health dentists being available to all!"
	Mrs. Whiffen has been hit by a double whammy of higher taxes and a higher cost of living. Just last week, it was announced that the retail prices index was at its highest level in 15 years. No wonder Mrs. Whiffen struggles to pay for private dental treatment. I bet the Chancellor did not have to think twice about how he would pay for his.
	People on low incomes have been hit by the Chancellor's clunking fist, and so, too, have small businesses. The increase in the corporation tax rate for small companies hit the backbone of the economy. Small businesses are the lifeblood of constituencies such as mine. It is hard to understand the Government's strategy; they introduced the zero per cent. corporation tax rate to stimulate enterprise as recently as 2002 and then scrapped it just last year. Now they want to increase, in stages, the small companies rate to 22p, costing small businesses £1.2 billion over three years. Surely hard-working small business men and women deserve a break from the Chancellor's constant tinkering with the tax system.
	The Treasury says that it will recycle the proceeds of the tax hike through higher capital allowances and research and development tax credits, but that does nothing for the small companies in the service sector that do not need to buy many assets—the caterers, the builders, the hairdressers. Even small manufacturing companies will feel the pinch under the Government's tax hike. The Chancellor did the right thing for large businesses by cutting the headline corporation tax rate, but he has hit small businesses hard. It is difficult to escape the conclusion that for businesses, last week's Budget was all about good headlines, not proper, well thought through tax reforms to benefit businesses regardless of size.
	There is no clear direction in the Budget. It increases corporation tax for small businesses but cuts it for large businesses, and cuts capital gains tax for large businesses but increases capital allowances for small businesses. There is simply no logic in the Budget for business. It is no wonder that it has been greeted with scepticism by a number of people from across the business community. The Institute of Chartered Accountants describes the Budget as
	"a piecemeal budget which tinkers with the system rather than starting the comprehensive reform which is so overdue."
	The clunking fist has landed blows on small businesses and people on low incomes, but they are the innocent victims of the Budget. The Budget's purpose was clear: its real audience was not hard-working families struggling to keep pace with the rising cost of living, or people running small businesses, but the Chancellor's own Back Benchers, who were worried about how badly Labour will do under his leadership.
	The Chancellor has used the Budget to discourage serious challengers from coming forward to make a real fight of the leadership election. It was a Budget for the Chancellor's future, not the nation's. The Budget could have marked an end to spin, an end to hiding the bad news in the small print, and an end to the cavalier treatment of the public and of the Chancellor's colleagues, but it was none of those things—there was no change. The Economic Secretary understood the impact when he wrote that book five years ago. Let me quote from it again.

Edward Balls: Oh no.

Mark Hoban: The Economic Secretary should listen, because he will learn a lesson. He said:
	"You can only fool people once. But once you have—the public and markets expect it again. And again."
	For the 11th and final time, the Chancellor has tried to fool the people, but they expected it. Yet again, they have seen through it. They have seen through him as Chancellor and they will see through him as Prime Minister.

Edward Balls: This has been an interesting debate, characterised by speeches which, particularly in the early stages, were expert and, in the later stages, a little more passionate than expert. I should like to take the opportunity to respond to a number of them, including the speech by the hon. Member for Fareham (Mr. Hoban) who, I think, failed to mention the environment once, even though we debated it today.
	I shall start with the environment, following the example of the opening Front-Bench speeches. As Sir Nicholas Stern said in his path-breaking report last autumn, unless the world takes urgent action to tackle climate change not only will the environment suffer but the global economy and the planet's poorest people will face catastrophe too. He is right. The global challenge that we face in dealing with climate change has never been starker; the case for action has never been so overwhelming; and the costs of doing nothing have never been so high. It is right to say that we all have responsibilities. Every section of society—individuals, businesses and Government—has a role to play. However—and this important point was stressed at the outset by my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs—the Budget has no truck with the false choice between action on climate change on the one hand and lower growth and greater unfairness and poverty on the other, whether in Britain or the developing world. The Stern report concludes that
	"the world does not need to choose between averting climate change and promoting growth and development."
	Those who argue that protecting the environment means that economic growth cannot continue or that open trade should be curtailed are seriously misguided. If we put in place the right global incentives to cut carbon and emissions, we can be both pro-growth and pro-green, and meet our international responsibilities to developing countries.
	That is exactly what we have been doing over the past 10 years with action to shift the tax burden from "goods" to "bads", and with the work that we have done to support and, indeed, to pioneer international emissions control and trading. In the Budget, we have set out further actions to advance the environment agenda, including a renewed commitment to the EU emissions trading scheme; a new £800 million international window for the environmental transformation fund; a competition for Britain's first full-scale carbon capture and storage; the extension of the biofuels incentive; a time-limited stamp duty exemption for zero carbon homes; a fuel duty increase of more than inflation; and a change to vehicle excise duty to sharpen the environmental signals that it sends, alongside a higher landfill tax escalator and an increase in the aggregates levy. The environment package in the Budget demonstrates the Government's commitment to tackling climate change and other environmental challenges while taking account of wider economic and social objectives.

Graham Stuart: I am extremely grateful to the Minister for giving way.

Peter Luff: It gives him a chance to pause for breath.

Graham Stuart: It is almost a pleasure to hear a pause in the House. If I were trying to defend a Budget that is bad for the low-paid and that has perpetuated the failure to provide properly for the environment I, too, would want to speak in an uninterrupted flow. Does the Minister accept that far from doing what the Government promised to do on coming to power—they said that they would move taxation from "goods" such as employment to things such as environmental "bads"—the percentage of tax on environmental "bads" has gone down under the Government, not up, and that that environmental failure is down to his boss?

Edward Balls: The Budget represents a net tax cut for families of about £2.5 billion on personal income tax, which is paid for, in part, by rises in environmental taxes on fuel duty and also in the other taxes that I set out. I was keen to describe the environmental measures in the Budget, before responding to the detail of the debate. I shall respond to the 12 or 13 speeches that we heard and to the hon. Member for Fareham.
	The hon. Member for East Surrey (Mr. Ainsworth) made an interesting speech. We waited minute by minute for any new policy. The only new policy seemed to be a commitment to higher vehicle excise duty on the most polluting cars, on the basis that the vehicle excise duty rates that we introduced in the Budget were insufficiently tough. The proposal did not go down too well with other Conservative Members, but we look forward to clarification of that intention in due course.
	The hon. Member for Eastleigh (Chris Huhne) started by welcoming the Budget and the Congo basin initiative, which I was pleased to hear. He asked what the overall effect of the Budget was on the environment. I refer him to the Chancellor's speech, in which he made it clear that many millions of tonnes of pollutants are being reduced as a result of the Budget.
	My right hon. Friend the Member for Oldham, West and Royton (Mr. Meacher) is not in his place. I fear he may be on the campaign trail this evening and is therefore unable to be with us. He made an important call for us to sharpen up the European emissions trading scheme. I agree. His commitment to tackling poverty and inequality is genuine, even though I would not agree with the measures that he advocated. Unfortunately, I will not be one of the 44 Members signing his nomination form, but I wish him well.  [Interruption.] Mine will not be one of the 44 signatures that he needs in order to stand in the leadership election.  [Interruption.] He might or he might not; I have no idea.
	My hon. Friend the Member for Islington, South and Finsbury (Emily Thornberry) made a powerful speech in which she called on us to act in the spending review to tackle the issues facing disabled children in our society, and particularly to increase the investment in language therapy in her constituency. She made a strong case that this is a progressive Budget which takes 200,000 children out of poverty, in addition to the 700,000 children who have been taken out of poverty since 1997, following the doubling of child poverty that occurred in the preceding 18 years. She argued forcefully that we would take no lectures from the Opposition on the subject of social justice.
	The hon. Member for Mid-Worcestershire (Peter Luff) made an interesting speech. He started off by claiming that the Budget had two objectives—to secure the leadership and to embarrass the Tory leadership. I have no idea whether my right hon. Friend the Chancellor succeeded in the first. He undoubtedly succeeded in the second. It seems that the shadow Chancellor spotted my right hon. Friend's clear commitment to switching the 10p rate to the basic rate, but the fact that he failed to tell the Leader of the Opposition in advance of his speech is probably revealing.
	The hon. Member for Mid-Worcestershire went on to say that the Chancellor was a lucky Chancellor. He clearly has not noticed that since 2000 France, Germany, Japan and America have all had recessions, and that Britain has bucked the international trend. He also called for a smaller public spending share of GDP and a halving of our corporate tax rates. I look forward to hearing from the Opposition Front Bench how that is to be paid for. There was an interesting contribution on renewables and a call for more action on stamp duty.

Greg Hands: I read in the  Evening Standard recently that the hon. Gentleman has been taking elocution classes. Can he answer this question clearly: why have stamp duty thresholds failed to keep pace with house price inflation or general inflation?

Edward Balls: Half of all first-time buyers pay no stamp duty at all, because in last year's Budget we almost doubled the stamp duty threshold. The idea that it has not kept pace with inflation since 1997 is nonsense.
	My hon. Friend the Member for Bishop Auckland (Helen Goodman) made a powerful speech about tax credits and personal allowances in which she made two important points. First, the take-up for tax credits is very high—among families earning £10,000 or less, it is 97 per cent. Secondly, she pointed out to Liberal Democrat Members that action to target poverty through tax credits is far more powerful than action through personal allowances: if one spends £1 billion by increasing the threshold for the working families tax credit, on average it will provide a family with about £7 a week; if one spends £1 billion through the personal allowance, on average it will provide a family with just 68p a week.

Christopher Huhne: What assumption is the Economic Secretary making about take-up?

Edward Balls: Those numbers are based on the take-up figures that I read out a moment ago.
	The hon. Member for Broxbourne (Mr. Walker) made an interesting speech—in a way, it was the most intellectually and politically honest speech of the evening. However, I did not agree with it at all, and if he studies the detail, he will find that the tax cuts that he called for in an impassioned way would lead to rising poverty among children rather than falling poverty—I am happy to go through the numbers with him.
	As always, the hon. Member for Braintree (Mr. Newmark) made a long speech, and it rivalled the Budget response by the Leader of the Opposition in its perceptiveness.
	The hon. Member for Preseli Pembrokeshire (Mr. Crabb) made an interesting speech for which I commend him. His discussion of carbon capture and storage was very interesting. When he said that he had been at a meeting of the Conservative human rights commission, I was surprised to find out that it exists and would have thought that listening to its proceedings would have been more interesting. However, his call for action on carbon capture and storage was interesting. In my experience, we should be able to make progress on both coal and gas, and I hope that that will be looked at carefully when the competition is run.
	Finally, I listened carefully to the speech by the hon. Member for Fareham. [Hon. Members: "What about the hon. Member for West Chelmsford (Mr. Burns)?"] I referred to the importance of passion as well as of expertise in my opening remarks, and in doing so I covered his speech. There is still one question that neither he nor his Front-Bench Treasury colleagues will answer: will they match our spending plans? The Budget announced that total expenditure, which is £552 billion this year, will rise by £34 billion to £587 billion in 2007. It will then rise by £29 billion in 2008 to £615 billion, by another £29 billion to £644 billion in the next year and then by an additional £29 billion to £674 billion in the following year. That is extra spending on schools, hospitals, law and order, defence and climate change. Will the Conservative party match our spending—yes or no? I am happy to take an intervention.
	The problem is that if one is committed to abolishing stamp duty at a cost of £4 billion, making a 1p cut in corporation tax, refunding the North sea oil companies and introducing a transferable married couple's allowance, one cannot match our public spending plans, which is revealed by the silence of Conservative Members. The reality is that the budget for schools, hospitals and law and order would be cut under Conservative plans.
	The Leader of the Opposition has made things very clear, and our careful balance between borrowing, tax and spending is quite different from his proceeds of growth rule. He has said that he will split growth between taxation and spending. In May last year, he told the "Today" programme:
	"as the money comes in...let's share that between additional public spending and reductions in taxes...That's a dramatic difference. It would be dramatically different after five years of a Conservative government."
	He is absolutely right.

Peter Luff: Will the Economic Secretary give way?

Edward Balls: I will not, because I have only five minutes. The reality is that one cannot claim to support our goals of tackling child poverty and investing in public services and at the same time continue with the proceeds of growth rule.

Peter Luff: Will the Economic Secretary give way?

Edward Balls: I am not going to, because I want to turn to the environment. The whole House knows that the Conservative party, for all its rhetoric, stunts and opportunism, has consistently opposed the measures that the Government have taken to address climate change and to protect the environment. It has consistently voted against the climate change levy and opposed planning permission for wind turbines and renewable energy schemes. It also opposes, through its stridently anti-European stance, the efforts that we are making to reach agreement on the next stage of the European emissions trading scheme. To be fair to the Leader of the Opposition, he has now come forward with a policy.

Peter Luff: Will the Minister give way?

Edward Balls: I shall not. The policy is to demand that every family report to Ministers every time they take a flight on holiday and to impose VAT on airline flights. Before we get overexcited, I should point out that the details require further inspection.

Graham Stuart: Will the Minister give way?

Edward Balls: No, I shall not. The details require further inspection, not least for their cost and civil liberties consequences. As for the tax proposal, it would apply only to domestic flights, business would be able to claim back the VAT and, even by 2020, it would save in one year what we achieve in one week through the climate change levy.  [Interruption.]

Peter Ainsworth: Why does the Minister not stop criticising the view of the Secretary of State for Environment, Food and Rural Affairs—that is exactly what he is doing now?

Edward Balls: I am not doing that at all. As the Secretary of State has said, we have worked very closely together on the full range of these tax policies. He made it clear in his speech that he has the same sceptical view of the tax on airlines as I do.  [Interruption.]

Mr. Speaker: Order. The Chamber is getting very noisy, and I am finding it difficult to hear what the Minister is saying. I must be allowed to hear what he is saying.

Edward Balls: The Conservative policy is a gesture and a signal, but what signal does it send? Ordinary families will be taxed more for their domestic trips, whereas business travellers will be able to claim back the money and foreign holidays will be exempt.
	The right hon. Member for Witney (Mr. Cameron) lectures the rest of us about things that clearly do not apply to him and his jet-set lifestyle. Over the past year, he has taken many flights both within the UK and abroad. I have no problem with that, but as his Register of Members' Interests makes clear, many of them were private flights on private aircraft or helicopters, and many of his trips were so short that by the time his plane was at cruising height, the flight crew were already prepared for landing. Only yesterday, we learned more about his private jet-setting and helicopter hops, which included a 20-mile trip one month and a 30-mile trip the next.
	What signal does that send? It is like the signal of riding a bike to work while the chauffeur is driving behind with the shirt and shoes in the boot. The signal is that the right hon. Gentleman's gestures and stance are not backed by substance; in fact, it appears that the opposite is true. He tells us that people who ignore aviation
	"can't be serious about climate change".
	However, he is not prepared to follow that advice.
	We are told by the Leader of the Opposition's office that such an approach is okay because the right hon. Gentleman carbon-offsets. That means that he takes his private flights and then writes a cheque to buy himself out of an awkward position. What does that mean in layman's language? It means do as I say, not as I do. Presumably his bike rides are also carbon offset; he must be the only cyclist in Britain who has to carbon-offset his own bike rides to work and pay the congestion charge for the limo driving behind.
	Is there not a wider pattern? The environment is not the only area about which the right hon. Gentleman says one thing and then does the other. He claims in public to support popular goals, but to appease his Back Benchers he then has to offset that by nodding in the opposite direction. One might say that carbon is not the only thing that the he has been offsetting in recent months. He says that he will put stability first, but then backs a £21 billion a year tax cut proposed by the Forsyth commission. He says that he supports the national health service, but offsets that with a proceeds of growth rule that would mean a £20 billion tax cut. He claims concern about child poverty, but offsets that by saying that he would abolish tax credits and the new deal.
	The fact is that it is the same old Conservative party. The public know that it is a party that cannot be trusted, and they also know that the Labour party has delivered record low inflation, record high employment, and falling child and pensioner poverty, and that it has led the world in tackling global emissions. The British public will not put all that at risk.
	 It being Ten o'clock, the debate stood adjourned.
	 Debate to be resumed tomorrow .

BUSINESS OF THE HOUSE

Ordered,
	That, at the sitting on Wednesday 28th March—
	(1) the Speaker shall put the Questions on the Motions in the name of Mr Jack Straw relating to:
	(a) Communications Allowance;
	(b) Notices of Questions etc. during September;
	(c) Select Committees (Reports); and
	(d) Parliamentary contributory pension fund
	not later than two hours after the commencement of proceedings on the first Motion, such Questions shall include the Questions on any Amendments selected by the Speaker which may then be moved, proceedings may continue, though opposed after the moment of interruption and Standing Order No. 41A (Deferred divisions) shall not apply; and
	(2) notwithstanding the provisions of Standing Order No. 16 (Proceedings under an Act or on European Union documents), the Speaker shall put the Question necessary to dispose of proceedings on the Motion in the name of Secretary Tessa Jowell relating to Betting, Gaming and Lotteries not later than three hours after their commencement, proceedings may continue, though opposed, after the moment of interruption and Standing Order No. 41A (Deferred divisions) shall not apply.— [Mr. Heppell.]

DELEGATED LEGISLATION

Motion made, and Question put forthwith, pursuant to Standing Order No. 118(4) (Delegated Legislation Committees),
	That the Construction (Design and Management) Regulations 2007 (S.I., 2007, No. 320), dated 7th February, be referred to a Delegated Legislation Committee.— [Mr. Heppell.]

COMMITTEES

Environmental Audit

Ordered,
	That Emily Thornberry be discharged from the Environmental Audit Committee and Mr Shahid Malik be added.— [Mr. Heppell , on behalf of the Committee of Selection .]

Mr. Speaker: It may be convenient to the House to take motions 5 and 6 together.
	 Ordered,

Public Accounts

That Sarah McCarthy-Fry be discharged from the Public Accounts Committee and Derek Wyatt be added.

Finance and Services

That Mr Eric Martlew be discharged from the Finance and Services Committee and Mary Creagh be added.— [Mr. Heppell , on behalf of the Committee of Selection .]

PETITIONS

Tiverton and Honiton Hospitals

Angela Browning: I have two petitions on behalf of my constituents. At the end of last year, we lost services in two of our community's hospitals. The night-time small injuries units were closed and, in the case of Honiton, seven beds were closed without any prior consultation or warning. There has been great support in my constituency for urging the reopening of those services and seeking the reassurance that we are not going to see further closures of services in the coming year. On Friday, the primary care trust indicated that on Wednesday it will recommend to its board the reopening of the minor injuries unit, which I welcome. However, the petitions express the widespread concerns not only of patients but of medical professionals in my constituency.
	The petitions state:
	To the honourable the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled.
	The Humble Petition of:—
	Janet R. Rendle and residents of the town of Tiverton, Devon and neighbouring parishes.
	Sheweth that the decision by the Devon Primary Care Trust to close the night time small injuries unit at Tiverton Hospital up to 31st March 2007 has been to the detriment of patients.
	Wherefore your petitioners pray that your honourable House urge the Secretary of State for Health to re-instate such services as of 1st April 2007 and that the PCT should give assurances as to the future of the Tiverton Hospital.
	And your Petitioners, as in duty bound, will ever pray.
	 To lie upon the Table.
	To the honourable the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled.
	The Humble Petition of:—
	Roger William Boote and residents of the town of Honiton, Devon and neighbouring parishes.
	Sheweth that the decision by the Devon Primary Care Trust to close the night time small injuries unit at Honiton Hospital, together with bed closures up to 31st March 2007, has been to the detriment of patients.
	Wherefore your petitioners pray that your honourable House urge the Secretary of State for Health to re-instate such services as of 1st April 2007 and that the PCT should give assurances as to the future of the Honiton Hospital.
	And your Petitioners, as in duty bound, will ever pray.
	 To lie upon the Table.

IVF TREATMENT

Motion made, and Question proposed, That this House do now adjourn.— [Huw Irranca-Davies.]

Grant Shapps: I am grateful for the opportunity to raise a subject that is dear to my heart and to that of many people throughout the United Kingdom—IVF treatment, especially that provided by the national health service.
	In February 2004, the then Secretary of State for Health announced at the Dispatch Box that he was minded to accept recommendations by the then National Institute for Clinical Excellence to provide at least one cycle of IVF on the NHS for infertile couples throughout the country. I remember the announcement not because I sat here—I had not been elected at the time—but because my wife was pregnant with our twins, who were born through the IVF procedure. I turned to her and said, "This is great news. I'm so delighted by today's announcement." The anxiety caused by IVF treatment is roughly split into psychological effects—it is an enormously stressful time for women, and couples in general—and physical effects. It is a punishing schedule, what with all the drugs that have to be taken, the waiting and the invasive procedures.
	The other element of IVF treatment is its financial aspect. I was delighted by the then Health Secretary's announcement simply because others would not have to go through some of the stresses and strains that we had to undergo in funding several IVF cycles. The twins came on our third cycle. We already had an older boy through IVF.
	I therefore looked forward to couples not having to undergo at least the financial aspects of the stress and trauma. However, I was contacted last year by constituents in Hatfield, Mr. and Mrs. Smalley, who said that they had been trying to obtain IVF through the NHS and could not understand why the primary care trust was turning them down. I did not know the primary care trust's criteria, so I contacted it and got a copy. There were 12 different points that the Smalleys would need to fulfil to get IVF treatment through the NHS and I sent them to the couple. They came back to me and said that they believed that they qualified on all fronts. They went back to their doctor, were told that they indeed qualified on all fronts and applied again for IVF on the NHS. Again, they were told that there was none available through our PCT, which was the Hertfordshire primary care trust. That did not make sense, so I wrote to the chief executive to try to gain some clarity. He insisted that, as long as my constituents fulfilled the criteria, they could get the treatment. I told them, they returned to their doctor and the whole thing went round in circles again.
	We are now at the end of March 2007, and Mr. and Mrs. Smalley have yet to receive any IVF treatment through the NHS, despite the fact that they appear to qualify on every count and despite the Secretary of State's announcement at the Dispatch Box three years ago that infertile couples could get at least one cycle on the NHS, within specific criteria, which Mr. and Mrs. Smalley happened neatly to fulfil.
	I therefore decided to look further afield and discover whether we were considering an isolated case or whether it was a problem throughout the country. I undertook some research, which ended up in a report that I entitled, "The Messy Business of Conception". It deals with the picture throughout the country. I have the raw data, which now cover nearly 90 per cent. of PCTs. They have given us their list of criteria, such as the age groups they accept and whether a couple who already have children through their relationship or another can have IVF. The raw data make up the document, which I have subtitled, "How the Postcode Lottery in NHS IVF Treatment is Creating 'Baby Boundaries' for Childless Couples". Sadly, that is exactly what has happened three years after the Secretary of State announced to the House that everybody could have a cycle of IVF on the NHS.
	Some stark examples illustrate that. A woman who happens to live in Luton and is 35 would probably be told that she is too old to have IVF. However, if the same woman lived in Hampshire, she would be told that she is too young to have the treatment. There are huge disparities between different areas.

Martin Horwood: The hon. Gentleman raises an important subject, of which my constituents are acutely aware because Gloucestershire's PCT does not fund IVF routinely, as I hope that his survey reveals. How many other PCTs like mine made the decision as a result of short-term financial problems, not policy, despite the fact that, in Cheltenham's case, the original PCT did not have a deficit?

Grant Shapps: I am grateful to the hon. Gentleman, who may be interested to know that his primary care trust responded to our survey by saying that it is still providing IVF treatment.

Martin Horwood: indicated dissent.

Grant Shapps: I have all the criteria here—whether people are 30 to 39 years old, and so on and so forth. The trust said that it still provides the treatment. I suspect that the hon. Gentleman's point is at the heart of the problem of establishing how many PCTs do, in fact, provide this treatment and how patchy or otherwise IVF provision is across the country.
	The report officially names three PCTs that say that they do not provide IVF treatment. Subsequent to the report's publication, we found a further three that no longer provide it, either on a limited basis until the new Budget arrangements come through or perhaps on a permanent basis—we simply do not know yet. It is the first I have heard of Gloucestershire PCT, so I will check it out and add it to the list.

Peter Bone: I am grateful to my hon. Friend for his campaign and for drawing national attention to the lack of treatment for IVF. Does he agree that it is even worse in Northamptonshire because IVF treatment was available last year, but is no longer available because of financial cutbacks? When it is introduced again next year, the age criteria will be tightened. It is in many ways worse when couples who thought they were going to get IVF treatment from the PCT do not get it.

Grant Shapps: My hon. Friend is right. Arbitrary rules and regulations that were originally designed to fit in with expert medical opinion have now been twisted to fit not with medical opinion, but with the financial realities of the PCTs. I suspect that that is exactly what happened in my hon. Friend's PCT.
	That brings me to the wider picture of the patchiness of the service across the country. The survey reveals, as other contributions to this evening's debate have suggested, that rather than IVF moving forward by being more and more available throughout the nation, it appears to be moving in the opposite direction. It is a service very much in retreat, where PCT after PCT is no longer offering the service that constituents legitimately have a right to expect.
	In fact, because of the Secretary of State's statement that IVF was going to be freely available across the country, people rightly expected to be able to visit their GP and receive the service. In reality, it might have been better if the Secretary of State had thought twice before making such a statement. I hope that the Minister will acknowledge the point—I say it with some personal experience—that if infertile couples' expectations are raised and they believe that they can go to their doctors for referrals to an IVF specialist, they will expect to receive the treatment. If they are unable to, it will leave them worse off than they would have been if the Secretary of State had not stood at the Dispatch Box and made it sound as if the service was to be universally available.
	I am afraid that what we are probably talking about is simply the latest priority. Back in February 2002, it happened to be provision of IVF treatment, but it was piled on top of other priorities that changed again later. For example, I was studying the position of audiology treatment the other week and discovered that it took an average of 40 weeks for people to get hearing aids fitted. Then the Government issued their review and decided that there should be an 18-week target— [Interruption.] If the Minister listens, she will understand my point. What happens is that, week after week, month after month, new priorities are set from the Dispatch Box, but they are willed without the means to make them happen.
	Before anyone suggests it, this is not a matter of my standing here calling for additional resources. What I am saying is that it is wrong falsely to raise the expectations of couples who are often in the desperate situation of wanting to have IVF treatment to help them have children, only to find, when it comes to it, that they are unable to get it.
	As "The Messy Business of Conception" has revealed, the way in which the process is operating has set up baby boundaries across the country. In some areas, couples can confidently expect to receive IVF assistance, but in others, entirely arbitrarily, they will be unable to get that treatment. It is unfair for those couples to be treated in such way and sets entirely the wrong expectations. It is incumbent on the Government to do something about that, and I know that they are interested in doing so: the Secretary of State for Health has said that the Government will listen carefully both to my report and representations from Infertility Network UK, which is being funded to do work that I am sure that the Minister will tell us about.
	That is all good stuff, but unless a framework is set that delivers the policy on the ground rather than handing it over to PCTs and piling on another target—and we have heard the Government say previously, "If they can't spend the money correctly, we can't help them"—baby boundaries and the NHS postcode lottery in IVF are set to continue.

Rosie Winterton: I congratulate the hon. Member for Welwyn Hatfield (Grant Shapps) on securing the debate. The hon. Members for Cheltenham (Martin Horwood) and for Wellingborough (Mr. Bone) have also made significant contributions, and some important points have been raised. I agree that we all wish to see the considerable resources available to the NHS used, in part, to increase the provision of fertility treatment for those who would not otherwise be able to conceive. Certainly, the Minister of State, Department of Health, my hon. Friend the Member for Don Valley (Caroline Flint), gave the issue considerable attention, even before the survey by the hon. Member for Welwyn Hatfield was published.
	In a number of areas, people's expectations of fertility services are not matched by the provision of those services. There is variation from locality to locality. Undoubtedly, local needs and priorities are issues, and it is right that PCTs take them into account when allocating resources. The NICE guideline does not rule out variation in provision and, unlike a NICE technical appraisal, is not mandatory, although we recognise that it is of great significance to those who have fertility problems.
	The profile of fertility services was raised by the publication of the NICE fertility guideline in 2004, commissioned by the Government. No previous Government had taken such action on the matter. Disappointment remains in some areas, however, for some people with fertility problems. As I have said, some of that is due to PCTs considering local needs and priorities and making decisions accordingly. We certainly recognise, however, that there is room for improvement, and that enabling patients' voices to be heard in decisions about priorities is an issue.
	The hon. Gentleman's survey refers to Hampshire as an area where provision is limited to couples in which the woman is in a specific age range. Not long ago, however, Hampshire provided no IVF treatment at all. Most PCTs are now funding a minimum national level of one cycle of IVF, although, as I have said, that is subject to some variation.

Peter Bone: Will the Minister answer this question? Is it acceptable that Northamptonshire primary care trust provides no IVF treatment for the people of Northamptonshire?

Rosie Winterton: We are trying to work with PCTs to ensure that there are improvements if provision is not meeting the guideline. It is right to say that bringing those services into line with the NICE guideline is taking longer in some areas than in others.
	The hon. Member for Welwyn Hatfield referred to the NICE guideline and the Infertility Network UK project. When the NICE fertility guideline was published, we advised the NHS that those PCTs that were providing no IVF were to offer a minimum national level of one cycle of IVF, and that all PCTs should progress to full implementation of the guideline in the longer term. Opposition Members asked whether the NHS was ignoring that advice in some instances. It is true to say that there is room for improvement. One way in which we want to address that is to look at those PCTs that are successful in implementing the guideline and to learn lessons from them.

Grant Shapps: I believe that there is a sincere effort to improve the service, and the work that is being sponsored and done by Infertility Network UK is to be welcomed, but does the Minister agree with the findings of the report, and additional findings since, which suggest that the service is retreating? NHS provision of IVF probably got better initially, but it is now getting worse.

Rosie Winterton: There is certainly variation. The purpose of the programme that we are trying to carry out is to address where IVF might have been given greater priority but, for one reason or another, problems have occurred, perhaps because of the local decision-making process. As I said, the Minister of State, as Minister with responsibility for public health, recognises that there are lessons to be learned from some PCTs. As the hon. Gentleman acknowledged, in 2005 she met a leading patient group, Infertility Network UK, and discussed the provision of IVF and what we could do to understand the difficulties in some areas and how we could get greater consistency. That is why she invited Infertility Network UK to work with the Department on a specific project to consider the strong areas of IVF provision and those that are not so strong, first, to identify good practice and, secondly, to share good practice between PCTs.
	Infertility Network UK is working towards making the expertise developed by some PCT commissioners available to all. It will shortly be working directly with some PCTs to ensure—this is the crucial issue—that the patient's voice is heard at a local level and to look at best practice on the implementation of the guideline. It is right to say that the starting point for Infertility Network UK is that some PCTs give higher priority to IVF than others. There may be many complex reasons for that. For example, Cheshire and Merseyside PCTs carried out a major consultation exercise in 2005 on access to NHS-funded fertility services across their areas. A number of public meetings took place, and the outcome was the decision to provide two cycles of IVF in appropriate areas. We want to establish whether other PCTs have done the same and concluded after consultation that IVF is not yet a priority in the areas concerned, or whether there has been too little consultation. We are trying to identify the differences in approach, and how they relate to the differences in outcome.
	Another aspect of the PCT project is also very important to prevention. I refer to Infertility Network UK, which will ask about PCT plans to implement the chlamydia screening programme which is being introduced throughout all PCTs during the year. As the hon. Member for Welwyn Hatfield may know, untreated chlamydial infection may have serious long-term consequences, especially for women, in whom it is a well-established cause of pelvic inflammatory disease, ectopic pregnancy and infertility. Tackling the prevalence of chlamydia through the screening programme is one of the key commitments in the "Choosing Health" White Paper, and we are investing an extra £80 million in it. That is a clear signal of the Government's commitment, and supports our broader strategy to improve sexual health in the population as a whole.

Grant Shapps: Will the Minister give way?

Rosie Winterton: I will, but only once more, because time is running out.

Grant Shapps: I am grateful to the Minister, who I think was agreeing with me that the IVF service may be somewhat in retreat, although it is trying to remedy its problems. Is she aware that Infertility Network UK itself agrees with my proposition that the service is in retreat?

Rosie Winterton: Obviously the Infertility Network UK project is reporting back to Ministers, who will examine its findings carefully. That may arise in what I am about to say about how the project will work in practice.
	As the first stage of the project, PCTs have been sent a questionnaire by Infertility Network UK to establish their current provision and practices. The figures are being analysed, and my hon. Friend the Minister of State will examine them closely. We will then convey them to the NHS, which will use them as a basis for assessing some of the variations in provision. I am happy to say that Doncaster PCT has responded to the questionnaire. Members may wish to ask their own PCTs whether they have done so as well.
	The next stage of the project will involve direct contact between a member of the Infertility Network UK project team, with a patient and a clinician, and the NHS. In some areas that will mean visits to PCTs for more in-depth discussions about the situation and an exchange of information. We will emphasise the importance of patient involvement in the determining of local services, and ensuring a real focus on best practice in the local community.
	The all-party parliamentary group on infertility has done excellent work in raising awareness of fertility issues. My hon. Friend the Member for Stockton, South (Ms Taylor), who chairs the group, met my hon. Friend the Minister of State recently, along with members of Infertility Network UK, to discuss how the project was going. We are trying to keep the group involved. My hon. Friend the Minister is aware of the differences in provision of IVF services and of issues raised by the hon. Gentleman relating to the application of social access criteria, and also of emerging information on different treatments and their effectiveness in terms of safety, value for money and success. It is important that we take all of those issues into account.
	We are all aware that fertility problems cause great distress that is hard to bear for those affected. It is important that decisions are made at local level so that account is taken of local priorities. It is also important that we all do we can to raise awareness of fertility issues. We must all work towards achieving that, but we should also look into ways in which infertility can be prevented in some cases—not only through chlamydia screening, which I talked about, but also by addressing issues such as smoking, obesity and general sexual health, so that we can be sure that we are taking account of prevention strategies.
	We have had a thoughtful discussion of some of the key issues to do with fertility, and I hope that I have been able to reassure Members that we take this matter seriously, and that we are taking specific action by examining whether, and how, we can eradicate some of the variations that have been mentioned.
	 Question put and agreed to
	 Adjourned accordingly at twenty-nine minutes to  Eleven  o'clock.